Equation of Value
Free SOA Exam FM (Financial Mathematics) lesson in Time Value of Money. 16 min read, ~2,396 words.
Equation of value: PV of inflows = PV of outflows at a chosen focal date. Compound interest: any focal date gives the same answer; under simple interest the focal date matters, so use the date the problem specifies. Unknown payment: set the focal date at the payment time so carries...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 1d
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