Financial Modeling for Investment through Anticipated Annuities in Scenarios with Floating Interest Rate

Arturo García-Santillán^1, , Lizette Gutiérrez-Delgado², Celia Cristóbal-Hernández³ and Virginia Catalayud-Gutiérrez⁴

¹Researcher at Administrative-Economic Research Center at Universidad Cristóbal Colón, Veracruz, México

²Jr. Financial Adviser at Actinver-Grupo Interacciones and Master Program at UCC, Veracruz, México

³Researcher at Instituto Tecnológico de Tuxtepec, Oaxaca, México

⁴General Accounting at IPEIMS S de RL de CV and Master Program at UCC Veracruz, México

Cite this paper:
Arturo García-Santillán, Lizette Gutiérrez-Delgado, Celia Cristóbal-Hernández and Virginia Catalayud-Gutiérrez. Financial Modeling for Investment through Anticipated Annuities in Scenarios with Floating Interest Rate. American Journal of Applied Mathematics and Statistics. 2015; 3(3):93-99. doi: 10.12691/ajams-3-3-2

Abstract

The aim of this work focuses on showing, through a hypothetical scenario with financial calculations, how to develop an investment with constant one-year deposit and reinvestment of dividends earned. To this end, the financial model includes a type of floating interest rate throughout the year, depending on the reference interest rate indicated by the "Banco de Mexico". For this reason in the hypothetical scenario we are considering changes in interest rates at the moment of reinvestment. Therefore, to make financial calculus, we utilized as reference interest rate, the interest rate TIIE (for its acronym in Spanish) Interest rate of Internal equilibrium, which is set by the “Banco de Mexico”. We utilized the formula of an annuity anticipated with cohorts, depending on the changes in the interest rate TIIE. The results obtained show the behavior of the investment over a year in which the interest earned at all times is reinvested, generating an effect known in Mexico as “anatocismo” or compounded interest.

Keywords:
anticipated annuities floating rate interest investment savings tiie effective rate

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