Internal difference method: its basic principle is to assume that there is a linear relationship between these two variables, that is, a straight line relationship. (1), for a curve, it can be understood as infinitely many infinitely short straight lines. For example, if you divide a curve with the length of 1 cm into 100 equal parts, each part will be very small. Although it is still a curve, the gap with the straight line may be smaller. If it is divided into 1000 parts, the circumference in the formula is 10000. .............'s mathematics books are all calculated according to this original theory, and the precision of pi is the same as how much you divide the circumference equally. Based on this principle, we can get the theoretical basis of the internal difference method.

(2) In two-dimensional space, a point is represented by two values, and a straight line is the shortest distance line between two points. From the mathematical theory, we know that two points determine a straight line, and after two points, we can know this straight line (how to deduce linear equations, see junior high school or senior high school math books).

For example, point A (X 1, Y 1) and point B (X2, Y2) are known.

We know the equation of AB straight line: (y-y1)/(y2-y1) = (x-x1)/(x2-x1).

Or: y = {(y2-y1)/(x2-x1)} * (x-x1)+y1(which can be deduced from the above formula).

(3) The internal difference method used in our accounting and financial management is only an approximate calculation method, because the current net amount corresponding to each discount rate in accounting and financial management cannot be a straight line, and its sample space may be a curve or a collection. In order to simplify the calculation, we try to use two similar discount rates for estimation and calculation. In this case, the internal difference method can be used for approximate calculation. So when we do the problem, we usually give a discount rate of 1% ~ ~ 2%. If the difference is too far, it will be inaccurate.

For example, when the discount rate is 8%, the net present value is 120, when the discount rate is 9%, the net present value is -50, and when you find the discount rate, the net present value is 0 (that is, the internal rate of return).

Then the discount rate y = {(9%-8%)/(-50-120)} * (0-120)+8% = 8.71%.

Disadvantages: This method is only an estimation method. According to mathematical theory, only the values of two numbers are small enough can the result be accurate, so try to take two ranges with little difference.

The internal difference method is not only used in this respect, but also a theoretical method. As long as the calculation accuracy is within the allowable range, we can use this estimation method for approximate calculation.