Formula For Pv Factor

    Re: Formula For Pv Factor


    So for the first row is this correct?


    Interest Rate = 5%
    No of periods will be = 12 as its 30/06/02007 - 30/06/2008
    Payment per month = 846,540.92


    Is that correct?

    Re: Formula For Pv Factor


    Quote from ByTheCringe2

    What is the mathematical formula to get this factor?


    It appears to be E column / C column. Which doesnt really make sense? :confused:


    Anyway that means you need to calculate the present value which is why I asked the questions above. i think I may be off track tho.


    More details would be nice. :)

    Re: Formula For Pv Factor


    Reafidy,


    -concerning the round is because the data mgiv provided had only 4 digits
    -concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
    having that you can calculate the pv any of your investments.


    filippo

    Re: Formula For Pv Factor


    Quote from filo65

    Reafidy,


    -concerning the round is because the data mgiv provided had only 4 digits
    -concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
    having that you can calculate the pv any of your investments.


    filippo


    Thanks Filo, crystal clear.

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