Published online by Cambridge University Press: 20 April 2012
One of the most powerful devices in the theory of compound interest is Makeham's formula. The essence of the formula may be stated as follows:
Consider an admitted loan of C bearing interest at rate g per annum (payable pthly in arrear) per unit of admitted capital. The loan is to be repaid by a series of payments each of which contains a capital portion and an interest portion. Let K be the value at rate i per annum effective of all the capital portions.