iemisc (version 0.5.0)

EffInt: Effective Interest rate (Engineering Economics)

Description

Computes the effective interest rate given the nominal interest rate per period

Usage

EffInt(r, frequency = c("annual", "semiannual", "quarter", "bimonth", "month",
  "daily"))

Arguments

r

numeric vector that contains the nominal interest rate(s) per period as a percent

frequency

character vector that contains the frequency used to obtain the number of periods [annual (1), semiannual (2), quarter (4), bimonth (6), month (12), daily (365)]

Value

• EffInt numeric vector that contains the effective interest rate rounded to 2 decimal places (this is the i used in the other Engineering Economics functions)

encoding

UTF-8

Details

i is expressed as

$$i = \left(1 + \frac{r}{n}\right)^n - 1$$

[object Object],[object Object],[object Object]

References

1. SFPE Handbook of Fire Protection Engineering. 3rd Edition, DiNenno, P. J.; Drysdale, D.; Beyler, C. L.; Walton, W. D., Editor(s), 5/93-104 p., 2002. Chapter 7; Section 5; NFPA HFPE-02. Seehttp://fire.nist.gov/bfrlpubs//build02/art155.html.
2. William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling,Engineering Economy, Fourteenth Edition, Upper Saddle River, New Jersey: Pearson/Prentice Hall, 2009, page 164-165.

Examples

library(iemisc)
# Example 4-28 from Sullivan Reference text (page 165)
EffInt(1.375, frequency = "month")
# the nominal interest rate per period (month) is 1.375\%


# Example from SFPE Reference text
EffInt(18 / 12, frequency = "month")
# the nominal interest rate is 18\% per year or 18\% / 12 months