## Financial Models

Compound Interest Formula

Financial Models

Loans- Reducing balance loans
- Home loans (calculations with variable rates)
- Interest only loans and sinking funds
- Comparison interest rates
Strategies to minimise interest |

Compound interest can be calculated by using the following formula: \[Pv=Fv(1+\frac{i}{k})^{kn}\] Where :

Pv = Present value

Fv = Future value

i = Interest rate per annum (as a decimal)

k = The number of times the interest compounds each year

n = Time (years)

Pv = Present value

Fv = Future value

i = Interest rate per annum (as a decimal)

k = The number of times the interest compounds each year

n = Time (years)