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There are four types of credit instrument including simple loans, discount loans, coupon bonds and fixed loans. All these credit instruments have different interest payments and they are calculated in different ways. Simple interest is calculated is as follows:
Present value = Summation cash flows/(1 + i)n
PV = Summation C/(1 + i)n
Where, PV can be the price or the current loan value and C is the cash flow or future value. N is the number of periods and i is the interest rate.
Present value = Summation cash flows/(1 + i)n
PV = Summation C/(1 + i)n
Where, PV can be the price or the current loan value and C is the cash flow or future value. N is the number of periods and i is the interest rate.
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