Formulae

Question 1

Interest

Answer 1

Interest = 
Amount invested (Principal) x Interest rate per year x Time period, 
or I = P x R x T

Question 2

Effective Yield

Answer 2

Effective Yield =
((Total Future Value – Original Investment)
÷ Original Investment) x 100

Question 3

TDSR

Answer 3

TDSR =
[ (Monthly housing costs) + (all other monthly debt payments) ]
÷ (Gross monthly income)

Question 4

GDSR

Answer 4

GDSR =
[ (Monthly mortgage payment) + (1/2 condo fee) + (Property tax) + (Heat) ]
÷ (Gross monthly income)

Question 5

Real Rate of Return

Answer 5

Real Rate of Return =
[ i - inflation ]
÷ [ 1 + inflation ]

Question 6

After-Tax Rate of Return

Answer 6

After-Tax Rate of Return =

i * (1 - MTR)

Question 7

Real After-Tax Rate of Return

Answer 7

Real After-Tax Rate of Return =
[ i * (1 - MTR) - inflation ]
÷ [ 1 + inflation ]