I am interested in calculating returns from a fixed no of periodic investments that is redeemed at a specific time after the last payment.
ex : periodic outflow of 3000 on a monthly basis for 8 months.
year 1 :
may - 3000 june - 3000 july - 3000 aug - 3000 sep - 3000 oct - 3000 nov - 3000 dec - 3000
year 2 :
no additional outflows.
year 3 :
redemption in may.
all outflows are at the beginning of the month.
I would like to know if the below approach is correct
total of all ouflows - 24000
redeemed amount - 32405.33
no of months held - 17 (year 2 jan to year 3 may)
assume Future Value as 32405.33, Present Value as 24000, calculate interest using FV = PV ( 1 + i)^17.
Interest rate will be determined for a month.
Using the rate calculated above, find present value of the outflows from may to dec at may of year 1.
pv@year1_may = 3000 [ ( 1 - (1 + i)^8 )/i ] .
now with pv@year1 and fv = 32405.33 (redeemed value), calculate for interest rate with no of terms as 24 using
FV = PV (1 + i)^24.
Please share any knowledge material that explains above scenario.
ex : periodic outflow of 3000 on a monthly basis for 8 months.
year 1 :
may - 3000 june - 3000 july - 3000 aug - 3000 sep - 3000 oct - 3000 nov - 3000 dec - 3000
year 2 :
no additional outflows.
year 3 :
redemption in may.
all outflows are at the beginning of the month.
I would like to know if the below approach is correct
total of all ouflows - 24000
redeemed amount - 32405.33
no of months held - 17 (year 2 jan to year 3 may)
assume Future Value as 32405.33, Present Value as 24000, calculate interest using FV = PV ( 1 + i)^17.
Interest rate will be determined for a month.
Using the rate calculated above, find present value of the outflows from may to dec at may of year 1.
pv@year1_may = 3000 [ ( 1 - (1 + i)^8 )/i ] .
now with pv@year1 and fv = 32405.33 (redeemed value), calculate for interest rate with no of terms as 24 using
FV = PV (1 + i)^24.
Please share any knowledge material that explains above scenario.