Reading 58 // Quickly Way to Calculate Reinvestment Income F interest, several, income, whole

bkballa

Hello,
The formula to calculate Reinvestment Income for year 1 is :
RI = coupon interest*(1+r)^(n-1)
If I want to calculate the reinvestment income for several years, I need to calculate each year and then summing all years but it takes a lot of time if we have 10 years for instance.
Do you know, by any chance, a quick way to calculate the reinvestment income for the whole 10 years in one calculation?
Thanks !

bkballa

SpyAli wrote:
Do it through Future Annuity formula.
RI = CP x { [ ( 1 + i )^n -1 ] / i } - Capital Gain - Coupon Payments
the proper way to do this is:
RI = CP x { [ ( 1 + i )^n -1 ] / i } - n*CP
You needn’t subtract Capital Gain

Finalnub

Thanks a lot ! I will try it tonight !

hanvinh

Error in the formula, this is the correct formula :
RI = coupon interest*(1+r)^(n-1) - coupon interest