Financial Math Formulas and Financial Equations
Financial math has as its foundation many basic finance formulas related to the time value of money. In addition, particulars related to certain financial instruments (bonds for example) are calculated using derivatives of these basic formulas. Other formulas used in financial math are related to probability, randomness and statistical analysis.
The financial equations below are helpful as they are. However, using the financial formulas provided here, one may also generalize and calculate answers for even more complex financial problems.
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Symbols and Variables in Financial Formulas
One important key to understanding formulas for financial math is knowledge of what financial symbols and variables represent.
The chart of symbols (located at the right) offers an explanation of the financial variables used in the formulas provided below.
Calculate the Number of Payments:
Convert Interest Rate Compounding Bases:
Calculate Effective Interest Rate:
Future Value Formulas
The future value of an single sum of money, a series of cash flows or of an annuity is the amount of value the invested money will have at a point in the future. The different equations below are used to calculate the future value of different types of monies and investments.
Calculate the Future Value of a Single Sum:
Calculate the Future Value with Compounding
Calculate the Future Value of a Cash Flow Series
Calculate the Future Value of an Annuity
Calculate the Future Value of an Annuity Due
Calculate the Future Value of an Annuity with Compounding
The most commonly sought payment calculation is the one for monthly payments. Of course, there are other ways payments are calculated as you can see below.
Calculate Monthly Payment
Calculate Sinking Fund:
Present Value Formulas
Present value calculations are performed to determine the value of an investment made in the future. The future investment may be of a single sum or a series of cash flows.
Calculate the Present Value of a Single Sum
Calculate the Present Value with Compounding
Calculate the Present Value of a Cash Flow Series
Calculate the Present Value of an Annuity with Continuous Compounding
Calculate the Present Value of a Growing Annuity with Continuous Compounding
Calculate the Net Present Value of a Cash Flow Series
Expanded Net Present Value Formula
Cash Flow Series Calculations
Calculate the Present Worth Cost of a Cash Flow Series
Calculate the Present Worth Revenue of a Cash Flow Series
Software for Creating Financial Formulas
The formulas displayed on this page were all created using MathCast, the open source equation editor, by Tom Chekam