Abstract
In an account with interest rate r, an amount St−1 increases after one period to S t . Compound interest. (The solution to the difference equation in (28.1).) S0 is called the present value of S t . Effective annual rate of interest. The present value A t of an annuity of R per period for t periods at the interest rate of r per period. Payments at the end of each period.
Keywords
- Interest Rate
- Planning Horizon
- Saving Rate
- Growth Theory
- Income Stream
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References
For compound interest formulas, see Goldberg (1961) or Sydsæter and Hammond (2005). For (28.17), see Norstrøm (1972). For growth theory, see Burmeister and Dobell (1970), Blanchard and Fischer (1989), Barro and Sala-i-Martin (1995), or Sydsæter et al. (2005).
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© 2010 Springer-Verlag Berlin Heidelberg
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Sydsæter, K., Strøm, A., Berck, P. (2010). Topics from finance and growth theory. In: Economists’ Mathematical Manual. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-28518-2_28
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DOI: https://doi.org/10.1007/978-3-540-28518-2_28
Publisher Name: Springer, Berlin, Heidelberg
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