-
Compound Interest Part 1 6
-
Lecture1.1
-
Lecture1.2
-
Lecture1.3
-
Lecture1.4
-
Lecture1.5
-
Lecture1.6
-
-
Compound Interest Part 2 3
-
Lecture2.1
-
Lecture2.2
-
Lecture2.3
-
-
Present Value 4
-
Lecture3.1
-
Lecture3.2
-
Lecture3.3
-
Lecture3.4
-
-
Annuities 6
-
Lecture4.1
-
Lecture4.2
-
Lecture4.3
-
Lecture4.4
-
Lecture4.5
-
Lecture4.6
-
-
Perpetuities 2
-
Lecture5.1
-
Lecture5.2
-
-
Bonds 6
-
Lecture6.1
-
Lecture6.2
-
Lecture6.3
-
Lecture6.4
-
Lecture6.5
-
Lecture6.6
-
-
Dividend Discount Model 3
-
Lecture7.1
-
Lecture7.2
-
Lecture7.3
-
-
Risk 8
-
Lecture8.1
-
Lecture8.2
-
Lecture8.3
-
Lecture8.4
-
Lecture8.5
-
Lecture8.6
-
Lecture8.7
-
Lecture8.8
-
-
Capital Asset Pricing Model 6
-
Lecture9.1
-
Lecture9.2
-
Lecture9.3
-
Lecture9.4
-
Lecture9.5
-
Lecture9.6
-
Annuities Conclusion
Extending to 4 Periods¶
Now that we get how to do this with two periods, we can move on to four periods (or in general any number of periods). If we have 5 years at an annualzied rate of 6% paid in quarters, the following is the calculation of the annuity value. We can say that each year $1000 is paid, meaning the coupon is $250 a quarter.
In [24]:
#Set up the basic variables
#Variable to track the present value
PV = 0
#The number of payment periods
n = 5*4
#The annualzied rate
r = .06
#The quarterly payment
coupon = 1000/4
#Go through each period
for x in range(1,n+1):
#The time is in quarter years so divide by 4
t = x/4
#Add in the present value
PV += coupon / (1+r)**t
print(PV)
4305.9914937938065
In [25]:
#Then way 1 to do nominal interest rates for the same
PV = 0
n = 5*4
r = .06/4
coupon = 1000/4
for x in range(1,n+1):
t = x
PV += coupon / (1+r)**t
print(PV)
4292.159696270487
Prev
Semi-annual Rate
Next
Introduction