Seems like I dozed through highschool -- here's a simple problem (find n):
1 - (d^n)/n = [1 + (i^7)/7] / [1 + (i^6)/6]
The answer is n = 42 = (6*7) [where i^m and d^n are, respectively interest and discount rates compounded on interval m and n], but I don't grasp the simple logic behind it. Please advise.
[edit] oops -- I should add the following rules/equations as well:
1 + i = 1/(1 - d)
(1-[d^m]/m)*(1+[i^m]/m) = 1
(1+[i^m]/m)^m = (1+[i^n]/n)^n
(1-[d^m]/m)^m = (1-[d^n]/n)^n
1 - (d^n)/n = [1 + (i^7)/7] / [1 + (i^6)/6]
The answer is n = 42 = (6*7) [where i^m and d^n are, respectively interest and discount rates compounded on interval m and n], but I don't grasp the simple logic behind it. Please advise.
[edit] oops -- I should add the following rules/equations as well:
1 + i = 1/(1 - d)
(1-[d^m]/m)*(1+[i^m]/m) = 1
(1+[i^m]/m)^m = (1+[i^n]/n)^n
(1-[d^m]/m)^m = (1-[d^n]/n)^n