Unit 4 Notes (Financial Math)

• R = Growth Factor
• R = 1 + i/100
• If compounded quarterly or by 6 months, add 2 or 4 to the 100
• P = Principal amount
• i = Interest
• recurrance relation = An + 1 = r x An
• Two Formulas of Compound Interest, Recurrence Relation and Growth Factor
• Exam Note - Make sure you use the formula specified in the question for financial questions
• r = 1 + i (/100) = percentage
• total interest = Last Annual interest - principal amount
• Future Value of an Investment - A = P x ( 1+ i ) - to the power of n
• n = number of years of loan
• Effective annual interest rate = annual interest earned/principal amount earned