First Principle- the principle from where the formulae comes. This is the basic and simplest form of the formula E.g Present value of annuity certain paid 1 yearly in arrear for n years is represented as - an -solving this leads to the solution. now by the first pinciple, instead of doing above, we can use (1+i)^-1+(1+i)^-2+...+(1+i)^-n