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actual or exact rate of interest on the principal
actual or exact rate of interest on the principal
• Effective rate of interest-
depicts the timing and amount of expenses (negative, downward) and revenues (positive, upward) for engineering projects.
depicts the timing and amount of expenses (negative, downward) and revenues (positive, upward) for engineering projects.
CASH FLOW DIAGRAM
positive cash flow or cash inflow
positive cash flow or cash inflow
Receipts-
negative cash flow or cash outflow
negative cash flow or cash outflow
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The interest is compounded at the end of
each period (month, quarter, year, etc.)
The interest is compounded at the end of each period (month, quarter, year, etc.)
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assumed that cash payments occur once per year, but compounding is continuous through the year.
assumed that cash payments occur once per year, but compounding is continuous through the year.
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- Certain banks lend money in such a way that they deduct the interest on the money at the time the loan is made.
- Certain banks lend money in such a way that they deduct the interest on the money at the time the loan is made.
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interest deducted
interest deducted
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actual amount received by the borrower
actual amount received by the borrower
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amount the borrower is obligated to repay
amount the borrower is obligated to repay
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