Initial
Investments Formula
We're
going to implement in
Matlab a formula for initial
investments.

This
code calculates the amount necessary to provide a stated future
value in
a specified time period.
You must enter the future value of the
investment, the
number of years, the number of compounding periods per
year and
the nominal interest rate. 
The
formula used to calculate initial investments is as follows:
where:
P = initial investment
T = future value
N =number of compounding periods per year
i = nominal interest rate
This is
our simple Matlab code to calculate the above formula:
function p =
initial_investments(t, n, y, it)
it =
it/(n*100);
p =
t/(1+it)^(n*y);
We create another script
to test and run the above mfile. This code starts the previous one:
clc;
clear; format bank
t =
input('Enter
total value after Y years: ');
n =
input('Enter
number of compounding periods per year: ');
y =
input('Enter
number of years: ');
it =
input('Enter
nominal interest rate: ');
init_invest
= initial_investments(t, n, y, it)
Example
1:
How
much should you invest at 8.5% to produce 10000 at the end of 10 years
if
interest is compounded quarterly?
Let’s
launch our program here...
Enter
total value after Y years: 10000
Enter
number of compounding periods per year: 4
Enter
number of years: 10
Enter
nominal interest rate: 8.5
The
result is:
init_invest
= 4312.38
Example
2:
A
savings company wishes to sell a bond which will be worth $5000 five
years from
the purchase date. Interest will be 7.9% compounded daily. How much
must the
bank charge for the bond?
Enter
total value after Y years: 5000
Enter
number of compounding periods per year: 365
Enter
number of years: 5
Enter
nominal interest rate: 7.9
The
result is:
init_invest
= 3368.54
From
'Initial
Investments' to home
From
'Initial
Investments' to 'Finance Formulas'
