TValue Amortization Software Basics
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To change the compounding for a rate change
When you have a rate change, you can change the compounding. This new
compounding period will be in effect from the start date of the cash ow line
and will not affect the cash ow lines that occur before it.
1. Display the Rate Change dialog from a Rate Change cash ow line. You
can do this by (a) clicking the far right of a Rate Change cash ow line,
(b) right-clicking on a Rate Change cash ow line and selecting Rate
Change, or (c) pressing F2 from a Rate Change line.
2. From the Compounding eld, select the desired period.
The compounding period chosen here must be compatible with subse-
quent payment periods. Compounding usually happens when payments
occur. It may also occur more frequently than payments, such as with
daily compounding. You cannot, however, combine a compounding
period with payments that occur more frequently, such as Annual
compounding with Monthly payments. In addition, you can't mix
week-based compounding with month-based payments.
The Daily, Exact Days, and Continuous compounding periods are
compatible with any payment period.
3. Click OK to close the Rate Change dialog.
To enter a rate change with no compounding
1. Display the Rate Change dialog from a Rate Change cash ow line. You
can do this by (a) clicking the far right of a Rate Change cash ow line,
(b) right-clicking on a Rate Change cash ow line and selecting Rate
Change, or (c) pressing F2 from a Rate Change line.
2. From the Compounding eld, select None.
3. Click OK to close the Rate Change dialog.
Choosing None for Rate Change compounding establishes a new interest
rate effective on the event date but does not cause compounding. When you
choose None for the compound period, it only applies to the Rate Change
event and does not affect the compound period of other cash ow lines.
You would usually use None for the compound period for loans where pay-
ments are regular but the interest rate changes at odd times based on market
rates. The overall compound period stays constant, and compounding is not
triggered by interest rate changes.
Entering Cash Flow Information