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Posted by April on January 23, 2002 2:45 PM

My teacher wants me to open the Inwood file on my disk and I have no idea what she is referring to.


Posted by Joe Was on January 23, 2002 3:17 PM

Inwood was an accountant/mathematician who in 1811 published tables to support the postulate that the present value of an annuity was based upon a single discount rate. His table is used to calculate the present value of an income stream in perpetuity. It converted an interest rate into a coefficient that when multiplied by the investment's annual income calculated the current value. That is (what we now call the Inwood premise) each installment of income is discounted as a reversion with a single discount rate, the total discounted values of the installments are accumulated to obtain the present value of the income stream.

This is done by using his table of compound interest as a series of one doller present value payments for a given rate and time period. It assumed that all the income will be sufficient to return all investment capital to the investor and pay the specified return on the investment.

What you are being asked, is to provide a compound interest table for rates and periods. JSW