Compounding and amortization

Compounding and amortization

Bachelor of Business Studies (BBS) — Second Year

Subject: Fundamentals of Financial Management (MGT 215)

Unit 3: Time Value of Money

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of compounding and amortization.
• Apply the relevant financial model, calculation or analytical approach and explain its assumptions and decision implications.

Curriculum Scope

• Semiannual and other compounding periods
• Loan-amortization schedules

Detailed Microsyllabus

1. Compounding periods

   1. Nominal rates and periodic rates.
   2. Semiannual and other compounding frequencies.
   3. Consistent period counts and effective-rate interpretation.

2. Loan amortization

   1. Payment, interest and principal components.
   2. Prepare an amortization schedule.
   3. Reconcile opening balances, repayments and closing debt.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 41-43.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here.