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Question on calculating FV using Book method

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    • Avatar of panwar.jaibeersinghpanwar.jaibeersingh
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        • FRM Part 1
        13 Feb 2022 at 4:05 am
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        While studying FV formula, I found myself very confused.
        for example I have Notional 1,000,000, interest 12% yearly (no comp), duration 1 month.
        Future Value (of interest) calculation is = Spot x (1+r)^t
        so here, FV comes as : 1000000*(1.12)^(1/12)=1,009,488.79
        therefore interest for one month is 1009488.79-1000000 = 9,488.79
        Shouldnt interest be 10,000 for one month?
        Basically, 12% yearly for 1000,000 is 120,000. So one month interest will be 10,000 (120,000/12 periods) only?

        Why do we have 9,488.79 vs 10,000 (manual)? Please help me.

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