general mathematics

• Lender or creditor– person (or institution) who invests the money or makes the funds available
• Borrower or debtor – person (or institution) who owes the money or avails of the funds from the lender
• Origin or loan date – date on which money is received by the borrower
• Repayment date or maturity date –date on which the money borrowed or loan is to be completely repaid
• Time or term (t)– amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates
• Principal (P)– amount of money borrowed or invested on the origin date
• Interest (I)– amount paid or earned for the use of money
• Rate(r)– annual rate, usually in percent, charged by the lender, or rate of increase of the investment
• Simple Interest (Is) – interest that is computed on the principal and then added to it
• Compound Interest (Ic)–interest is computed on the principal and also on the accumulated past interests
• Maturity value or future value (F) –amount after t years that the lender receives from the borrower on the maturity date
• Formula for Annual Simple Interest: I=Prt
• I= simple interest
• P= Principal or the amount invested or borrowed
• r= simple interest rate
• t= term or time in years
• maturity (Future) Value formula: F=P+I
• F= maturity(future) value
• P= principal
• I= simple interest
• Maturity(future) Value formula: F= P(1+rt)
• Compound Interest - The amount of money taken from the principal amount with interest and the interest money is being included in computing in the next interest of the months or years
• Frequency of conversion (m) – number of conversion periods in one year
• Conversion or interest period (t) – time between successive conversions of interest
• Nominal rate (r) – annual rate of interest
• compounded annually= 1
• compounded semi-annually: 2
• compounded quarterly: 4
• compounded monthly: 12
• compounded daily: 365
• Common logarithms are logarithms with base  10; log x is a short notation for log_10⁡x.
• Natural logarithms are logarithms to the base e (approximately 2.71828), and are denoted by “ln”. In other words, ln x is another way of writing log_e⁡x.
• Annuity - Sequence of payments made at equal (fixed) intervals or periods of time.
• Simple Annuity - an annuity where the payment interval is the same as the interest period
• Ordinary Annuity (or Annuity Immediate) – a type of annuity in which the payments are made at the end of each payment interval
• Annuity Certain – an annuity in which payments begin and end at definite times
• General Annuity - an annuity where the payment interval is not the same as the interest period
• Annuity Due – a type of annuity in which the payments are made at beginning of each payment interval
• Contingent Annuity – an annuity in which the payments extend over an indefinite (or indeterminate) length of time
• Term of an annuity, t – time between the first payment interval and last payment interval