What are some of the uses of compound interest in business?
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Return on investment (ROI) is a standard measurement ratio used to find the relative attractiveness of various avenues of investment. The return is calculated on Compound Interest. \nCredit card interest rates should be calculated on Compound interest basis.
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Compound interest is R=((1+r)^n)-1. Simple interest is R=r*n. If you know r and n then you can calculate either one. If you know n and R then you can reverse the formulas to find one or the other.\nFor example, 1% per month is 12% simple and 12.68% compounded. 12% p.a. compounded monthly is 0.949% per month, which is 11.39% simple.
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Well the PF that is deducted is paid in 2 tranches, check if you got both your tranches also.\n\nYou should ideally get your share + Company share + interest
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If you compound the interest (add the interest earned back into the principle) once a year, you get 6%. If you stop every three months, add the interest into the principle and start again, you'll have more money at the end of the year by accruing interest on the interest earned-to-date. \n\nSay 6% per year, works out to 1.5% for one quarter. Instead of investing $100 for a year, you invested $100 for one quarter and made $1.50. Then next quarter, you invest $101.50, by the third quarter you have $104.57, and at the end of the year you have $106.14. Because you invested the interest earned too. In finance, money*time = more money, so it's better to get your earnings ASAP instead of at the end of the year (e.g. daily compounding).
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- Attract potential investors when the business grows and needs to expand.\n- Better chances of getting credit from the banking system.\n- You will end up getting a better price if you ever decide to sell your compmany.
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Interest.\n\nSome banks also have hidden fees.
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There are three I use when doing some practice on an idea: businessweek, wall street journal, and virtual stock exchange.  The WSJ even keeps track of dividends.
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You run a bank and a competing bank has a branch across the street.\n\nYou compound your interest annually. So you use the formula: A = P * (1+i)^n.\n\nThe bank across the street says, "We'll compound your interest every month. Their formulate is: A = P * (1+i/12)^(n*12), which gives the customer a little better deal.\n\nOkay, this means war. You start advertising weekly compound interest, or: A = P * (1+i/52)^(n*52), which is a slightly even better deal.\n\nThe other bank compounds daily.\n\nSo you decide to take it as far as you can go. You'll compound continuously. You're formula is:\n\nA = P * (1+i/x)^(n*x) as x approaches infinity. \n\nThe bank across the street can't beat that. Oh, there's no infinity button on your calculator, so how do you calculate savings deposits?\n\nBy running this formula through limit theory, you use the fact that (1+1/x)^x as x approaches infinity is e, and you get the following formula:\n\nA = P*e^(i*n) for continuous compounding.\n\nI don't know of any bank that calculates interest continuously, but there are at least two natural phenomenons that change at a continuous rate.\n\nThe first is population growth, such as the number of humans on the plant, or the number of bacteria in a jar.\n\nThe other is radioactive decay, which is often described as "half-life."\n\nBoth of these natural behaviors are defined by the continuous growth formula, and it cannot be derived without limit theory.\n\nBy the away, we pretty much define calculus using limit theory, but one could argue that calculus isn't part of daily life.
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You will determine your net asset value, which would be your share of the assests minus your share of the liabilities. Which would be your physical assests, your accounts receivables, you account payables etc.\n\nTo this you will add intandibles such as good will. Your periodic sales or profit figure should help you estimate this number. It make also depend upon how desperate the  buyers is to buy ur business.\n\nHope this helps
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Simple interest is based on the consideration only whereas compound interest is accumulative.
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If you're using software, there is often a 'canned' chart of accounts included.\n\nIf you do a search for 'sample chart of accounts', you'll find many examples - you should look for one that best fits your type of company\n\nWhat many people do, if your biz is not complicated, is just use say 1xxxx for assets, 2xxxx for liabilities, 3xxxx for equity, 4xxxx for revenues, 5xxxx for cost of goods sold, 6xxxx for expenses, 7xxxx for taxes, 8xxxx for other income/expense.\n\nIf you more or less follow the order in which things will appear on the financial statements, you can't go too far wrong
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interest-SIMPLE INTEREST
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If compound interest is so simple that it is taught in high school, how come it took Albert Einstein, arguably the greatest scientist in the world, to call it the 8th wonder of the world?\n\nWas it to remind us that we forgot about a magic theory? Really, understanding compound interest is very, very difficult. The human mind does not comprehend such growth so easily. We in our physical selves have a simpler type of growth. So we do not comprehend compounding of growth. A few old, really old stories might just help.\n\nLet us start with the famous story of the Persian emperor who was so enchanted with a new 'chess' game that he wanted to fulfill any wish the inventor of the game had. This inventor, a mathematician, decided to ask for one seed of grain on the first square of the chessboard doubling the amounts on each of the following squares.\n\nThe emperor, at first happy about such modesty, was soon to discover that the total yield of his entire empire would not be sufficient to fulfill the 'modest' wish.\n\nThe amount needed on the 64th square of the chessboard equals 440 times the yield of grain of the entire planet. Just try converting into money in any currency and you will realise the importance of compounding.\n\nA similar analogy is that one penny invested at the birth of Jesus Christ at 4% interest would have bought one ball of gold equal to the weight of the earth in the year 1750. In 1990, however, it would buy 8,190 such balls of gold.\n\nAt 5 per cent, interest it would have bought one ball of gold by the year 1466. By 1990, it would buy 2,200 billion balls of gold equal to the weight of the earth!\n\nThe example shows the enormous difference 1% makes. It also proves that the continual payment of interest and compound interest is arithmetically, as well as practically, impossible.\n\nJust see what a difference it would have made if your great grandfather had invested in a bank fixed deposit only Rs 100 say 150 years back. What it would have grown to?\n\nHere is a dream sheet. See for yourself. Imagine Rs 100 is invested and it grows at 10 per cent every year.\n\nColumn 2 is what it will grow to if it was held for the number of years in column 1. So if your great grandfather invested Rs 100, 150 years ago, you would have inherited Rs 16 crore (Rs 160 million).\n\nNo. of years it is invested for:\nWhat it would grow to\nin Rupees:\n\n1  110\n\n5  161\n\n10  259\n\n15  418\n\n25  1,083\n\n50  11,739\n\n100  1,378,061\n \n150  161,771,784\n\n200  18,990,527,646\n\n300  261,701,099,618,845\n\n400  3,606,401,402,752,540,000\n\n500  49,698,419,673,124,400,000,000\n\n\nSo what is the learning from this sheet? Even a 1 per cent difference can make a mountain of a difference, but the greatest difference is made by the number of years the money remains untouched. That is the key.\n\nFor those more mathematically inclined, I state below the formula:\n\nVn = Vo * (1+r)^n\n\n'n' in the compounding formula is the number of times the amount is compounded.\n\nBut for practical purposes if you take that as the time for which you stay invested in an instrument, you would not be too wrong either.\n\nWhat it means is that:\n\nThe amount of money that you require (Vn) is equal to the amount invested today (Vo) multiplied by [1+ interest rate (r)] raised to the number of times the amount is compounded (n).\n\nIn this formula you as a client can control how much money you want at the end of the waiting period (Vn), how long the money can be invested (n), and how much money you can invest today Vo.\n\nInstead of worrying about 'r', just start investing. That is the key.\n\nTakeaways:\n\nStart investing early.\nDo not touch the amount for a long time.\nDo not keep jumping from one investment instrument to another.\nLet the power of compounding work for you. It would have worked for your grand-dad, dad and you. If they knew it, great. If they did not, you can start the line. At least your grandchild will pra
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There are 2 different formulas\n\nCompound Interest\nI = P(1 + r)^t\n\nCompounded Interest, and by this i mean compounded daily, weekly, monthly, yearly, etc...\nI = P(1 + (r/n))^(nt)\n\nCompounded Continously\nI = Pe^(rt)\n\nI = Interest\nP = Principle\nr = Rate\nt = Time
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COMPOUND INTEREST\n---------------------------------\n\n S = P (1 + I) n \n\nwhere:\n\nS = the future value\n\nP = the principal amount\n\nI = the periodic rate of interest*\n\nn = the # of compounding periods for the term of the loan\n--------\n\nFor example,\n\nIf the principal amount is $10,000, the periodic rate of interest is 10% and the # of compounding periods is 6, what is the value at maturity?\n\nS = P (1 + I) n \n\nS = $10000 (1 + .10) 6\n\nS = $ 17715.61\n\nhttp://homepages.cambrianc.on.ca/tutorial/thetutorialcentre/mathscience/math/compound_interest.htm\n\n\nSIMPLE INTEREST \n------------------------------\n\nAt start:\n\nT = P\n\nAfter 1 period:\n\nT = P + Pr = P(1 + 1r)\n\nAfter 2 periods:\n\nT = P + Pr + Pr = P + 2Pr = P(1 + 2r)\n\nAfter 3 periods:\n\nT = P + Pr + Pr + Pr = P + 3Pr = P(1 + 3r)\n\nAfter n periods:\n\nT = P(1 + nr)\n\n--------------------\nWhen money is borrowed, interest is charged for the use of that money for a certain period of time. When the money is paid back, the principal (amount of money that was borrowed) and the interest is paid back. The amount to interest depends on the interest rate, the amount of money borrowed (principal) and the length of time that the money is borrowed. \nThe formula for finding simple interest is: Interest = Principal * Rate * Time. If $100 was borrowed for 2 years at a 10% interest rate, the interest would be $100*10/100*2 = $20. The total amount that would be due would be $100+$20=$120. \n\nSimple interest is generally charged for borrowing money for short periods of time. Compound interest is similar but the total amount due at the end of each period is calculated and further interest is charged against both the original principal but also the interest that was earned during that period. \nhttp://www.learningwave.com/lwonline/percent/interest.html\n\n\n\nhttp://www.aaamath.com/g84-simple-interest.html \na calculater ..
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The IRS has general publications dealing with various homeowner issues.  For general info, try publication 530.  Mortgage Interest is publication 936. Selling is 523 and business use is 587.
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very - it enables you to raise money by showing finance companies what you want to do with what they lend you.\n\nThe other major use of a business plan (what we in Britain call a Corporate Plan) is so that you can measure how you are doing compared to what you thought you should be doing.   If figures are not matching up, why not?   Are sales down?   Are outgoings much higher than expected?   Why?   \n\nA business plan helps you to spot any problems when they are molehills and not when they become mountains.\n\nPeople who think they are not useful tend to run companies into the ground - or not have a business at all!