Discount Rate

[Albert Chan]

(02-13-2020 10:42 AM)Gamo Wrote:  To find the guess the HP-55 programs book used these formulas.

1. Direct Reduction Loan Interest Rate

[1 / (PV / PMT)] - [(1 / n^2) x (PV / PMT)]

Using our symbols here, we have:

\(\displaystyle I ≈ \frac{1}{P} - \frac{P}{N^2}\)

This is even better, and work well with big N.

With above guess rate formula, we have:

I(N= 36, P= 3000/100) ≈ 0.010185 → 0.010207
I(N=-36, P=-5000/100) ≈ 0.018580 → 0.017962 → 0.017958

Does anyone know how this is derived ?

This is as good as first pade approximation of reverted C, but less complicated.

\(\displaystyle I ≈ \frac{6\;(N-P)}
{N\;(N-1) + 2P\;(N+2)}\)

With above guess rate formula, we have:

I(N= 36, P= 3000/100) ≈ 0.010169 → 0.010207
I(N=-36, P=-5000/100) ≈ 0.017751 → 0.017958