Friday, July 25, 2008

Fin251

Started out by continuing with annuity. The difference between ordinary annuity and annuity due is when the cash flow occurs. Ordinary annuity takes cashflow happening at the end of the year while annuity due takes cash flow occuring now so you get one more year of interest.

Karing is very bored but typing on on the ipod touch is very hard and challenging but stimulating but very good practice in case I ever get enough money to buy an iPhone.......yay!..actually it's not that hard after all.....I shall go copy notes now....woah I accidentally pressed some wierd thing and the text started deleting itself!!!!!

PS: when I get my macbook will you help me set it up??!???!!!!!????

If you're doing problems and you round your answers for the interest rate then you will be penalized. What's funny about that is that the interest rate is not guaranteed to be the same for each year. But oh well, the problems are set in a fictional world.

Going onto loans. The principal value is the present value of repayments. So, the principal value can be used to calculate a fixed repayment amount. Paying a loan earlier is not beneficial because you have to sacrifice the interest that can be earnt on the money you will use to pay off the loan. However, if the interest rate between savings and borrowing is very different then it is better to pay off earlier.

*yawns*....Karen is obviously bored and sleepy again...the thing I hate about fin251 is that all these calculations are under the assumption that there is no tax which is just really really stupid since it makes you think it's really easy to invest a small sum of money and earn lots of money by making deposits....oh yes..they also use unbelievably high and unreal interest rates which do not change as apparently it is too advanced and goes beyond the scope of this course.

So back to me! The real interest rate is the nominal interest rate with the inflation rate subtracted from it.

Sent from my iPod Touch

1 comment:

karen * said...

it is so unbelievably hard to get a computer!!!! coz people are using the free internet to go on stuffs like blogs...(like me..=-=..but i PAID for my faster internet!!!)