Formulas: Economics

Financial mathematics

• Simple interest: S = P(1 + in)

• Compound interest: S = P(1 + i)n

• PV = FV / (1 + i)n

• FVann = PMT((1 + i)n − 1) / i

• PVann = PMT(1 − (1 + i)−n) / i

• ireal = (1 + i) / (1 + π) − 1


CVP and profit analysis

• TR = pQ, π = TR − VC − FC

• CM = TR − VC, CMunit = p − v

• Qbe = FC / (p − v)

• Rbe = FC / CMR, where CMR = CM / TR

• DOL = CM / π


Pricing and profitability

• ROI = Profit / Investment · 100%

• Markup = (Price − Cost) / Cost · 100%

• Profitability = Profit / Revenue · 100%


Statistics and macroeconomics

• x̄ = Σx / n

• I = x1 / x0, g = x1 / x0 · 100%

• D = σ², V = σ / x̄ · 100%

• GDP deflator = Nominal GDP / Real GDP · 100%

• Inflation = (P1 − P0) / P0 · 100%

• Unemployment = U / L · 100%, Multiplier = 1 / (1 − MPC)