CIVILEN 3080 Lecture Notes - Lecture 1: Cash Flow, Effective Interest Rate, Payback Period
2 May 2016
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Represents the interest earned in one year. 9% nominal rate with a rate of 2. 25% per quarter effective annual interest rate. When m=1, ia=r the effective interest is equal to the nominal interest r = nominal interest rate per year ia = effective annual interest rate. M = number of interest periods per year. Effective interest rate per payment period (i) pg. Effective annual interest rate generalized to get effective interest rate for any period. C = number of interest periods per payment period. K = number of payment periods per year. Ck = total number of interest periods per year, or m. Summary: effective interest rates per quarter at varying compounding. Loans for car appliance and mortgage typically paid in installments. Arp what a loan will cost per year. Fees are expenses lender charges to lend money. Financial charges are the cost of borrowing.
