While solving sum in finance where period or date is involved why we divide anything by 12/n or 365/n?What it represents? Please explain with logic
for eg: Return on Mutual fund=
NAV @ end-NAV @ beg + dividend/NAV @ beg *12/n*100
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12/n or 365/n
Replies (6)
12 represents months in a year and 365 represents days in a year.
That I know but usually we divide n/12 for instance in order to find discount for a particular period but why to divide n/12
why to divide 12/n
To get annualised return
Generally rate of interest is per annum that is for full year. We dividd the amt from 12 to get monthly interest.n here refers to no. of months. By multiplying the monthly amt with n , we get the amt for the period of investment.
Sorry misinterprete the ques. Here n/12 is for getting annual amt .
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