The accumulation function a(t) is a function defined in terms of time t expressing the ratio of the value at time t (future value) and the initial investment (present value). It is used in interest theory.
Thus a(0)=1 and the value at time t is given by:
- .
where the initial investment is k.
Examples:
- simple interest:
- compound interest:
- simple discount:
- compound discount:
In the case of a positive rate of return, as in the case of interest, the accumulation function is an increasing function.
Read more about Accumulation Function: Variable Rate of Return
Famous quotes containing the words accumulation and/or function:
“Creation destroys as it goes, throws down one tree for the rise of another. But ideal mankind would abolish death, multiply itself million upon million, rear up city upon city, save every parasite alive, until the accumulation of mere existence is swollen to a horror.”
—D.H. (David Herbert)
“The intension of a proposition comprises whatever the proposition entails: and it includes nothing else.... The connotation or intension of a function comprises all that attribution of this predicate to anything entails as also predicable to that thing.”
—Clarence Lewis (1883–1964)