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Some Nontrivial Properties of a Formula for Compound Interest

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  • Isaac M. Sonin
  • Mark Whitmeyer

Abstract

We analyze the classical model of compound interest with a constant per-period payment and interest rate. We examine the outstanding balance function as well as the periodic payment function and show that the outstanding balance function is not generally concave in the interest rate, but instead may be initially convex on its domain and then concave.

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  • Isaac M. Sonin & Mark Whitmeyer, 2018. "Some Nontrivial Properties of a Formula for Compound Interest," Papers 1809.10566, arXiv.org.
    • Handle: RePEc:arx:papers:1809.10566
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