Some nontrivial properties of a formula for compound interest

Isaac M. Sonin, Mark Whitmeyer

Research output: Contribution to journalArticlepeer-review


We analyze the classical model of compound interest with a constant per-period payment and interest rate. We examine the outstanding balance function as well as the periodic payment function and show that the outstanding balance function is not generally concave in the interest rate, but instead may be initially convex on its domain and then concave.

Original languageEnglish (US)
Article number101217
JournalFinance Research Letters
StatePublished - Mar 2020
Externally publishedYes


  • Compound interest
  • Loan repayment
  • Mortgages

ASJC Scopus subject areas

  • Finance


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