Fixed Interest Rate Compare With Annuity Interest Rate

FIXED INTEREST RATE COMPARE WITH ANNUITY INTEREST RATE By I Made Wijana Department Of Accounting, Bali State Polytechnic ABSTRACT Flat interest rate and annuity interest rate, which is usually implemented in credit program, has a relationship. If we set annuity interest rate as an independent variable and flat interest rate as an dependent variable, then the relationship between the two variable can be described explicitly as: it = 1/[{1-(1+ ia)-n}/ ia ] -1/n, conversely if we set flat interest rate as an independent variable and annuity interest rate as an dependent variable, then the relationship between the two variable must be described by an implicit function G(i t, ia )=0 ,where G(it, ia )=1- {it +1/n}{1-(1+ ia)-n}/ ia. In calculating the t relationship between flat interest rate (it) and annuity interest rate (ia) , where it is known, we can implement deterministic method, for example false position method ,or random method. Functional relationship implicitly between it and ia, can be described by a chart, after we implement numerical approach for example false position method to find a table of relationship between it and ia. The equivalency between it and ia, depend on n and it . For a certain it, if n=1 or n→ ∞ then ia = it. Also, for a certain n if it → ∞ then ia = it Key Words : flat interest rate, annuity interest rate, deterministic, random.

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