Definition:Compound Interest Table

Definition

A compound interest table is a reference table which is used to aid calculations involving compound interest.

It typically contains calculated values for the following items:

Accumulation Factor

Let $P$ be a principal invested under compound interest with an interest rate $r$ over a number of conversion periods $n$.

The accumulation factor of $P$ is defined as:

$\paren {1 + r}^n$

This is the amount to which $1$ unit of $P$ will increase to after $n$ conversion periods at interest rate $r$

Discount Factor

Let $P$ be a principal invested under compound interest with an interest rate $r$ over a number of conversion periods $n$.

The discount factor of $P$ is defined as:

$\paren {1 + r}^{-n}$

This is the amount of principal which will increase to $1$ unit after $n$ conversion periods at interest rate $r$.

Annuity Amount

Let a principal $P$ be invested every conversion period, and accumulated under compound interest with an interest rate $r$ over a number of conversion periods $n$.

The annuity amount of $P$ is defined as:

$P \dfrac {\paren {1 + r}^n - 1} r$

Annuity Present Value

Let a principal $P$ be invested every conversion period, and accumulated under compound interest with an interest rate $r$ over a number of conversion periods $n$.

The present value of $P$ is defined as:

$\dfrac {1 - \paren {1 + r}^{-n} } r$

That is, it is the amount necessary to provide $1$ unit payment at the end of $n$ conversion periods.

Also known as

A compound interest table is also known as a table of compound interest.

Also see

• Results about compound interest tables can be found here.

Sources

• 1998: David Nelson: The Penguin Dictionary of Mathematics (2nd ed.) ... (previous) ... (next): interest
• 2008: David Nelson: The Penguin Dictionary of Mathematics (4th ed.) ... (previous) ... (next): interest