By Morton D. Davis
ISBN-10: 1441928731
ISBN-13: 9781441928733
ISBN-10: 1475743343
ISBN-13: 9781475743340
Learn the way to calculate the mathematics at the back of your personal loan, the rate of interest in your charge cards, the hazards youre taking up the inventory market...
Making the proper judgements approximately day by day funds should be difficult, largely as the math concerned could be simply as difficult because the judgements themselves. In a transparent and conversational demeanour, Morton D. Davis describves the equations behind:
Mortgages: do you know that regularly 15 years of funds on a 30-year personal loan are commonly paxing off curiosity, now not the personal loan itself?
Stocks: Calculating investor psychology is critical. Stcoks haven't any better worthy than how a lot individuals are prepared to pay for them.
Interest Rates: How does compound curiosity paintings mathematically? you could wager mortgage shark who asks for five percentage curiosity on a one-week mortgage is charging 260 percentage curiosity in keeping with yr. utilizing compound curiosity, you could convey the particular rate of interest is greater than 4 instances that!
Retirement Funds: How do I retailer adequate cash - and retain it - to final for the remainder of my life?
Social Security: Does it make experience to hold up my payments?
Using enjoyable quizzes that try out your instinct, easy-to-understand examples, and illustrative tables, The Math of Money explains the right way to calculate, and really comprehend, your monetary picture.
Read or Download The Math of Money: Making Mathematical Sense of Your Personal Finances PDF
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Additional info for The Math of Money: Making Mathematical Sense of Your Personal Finances
Sample text
But even at moderate rates of interest you are unlikely to live long enough for delayed payments to be worthwhile and when interest rates are high it is better to take the immediate smaller payments no matter how long you live. 8 Annual Interest Rate 2% 4% 6% 8% 10% 12% $834,00 $707,000 $608,000 $530,000 $468,000 $418,000 Discounted Value of Million Dollar Prize When Is a Million Dollar Lottery Worth Half That? Various aspects of everyday life seem unrelated to interest but when you look closer, you find interest playing an important role.
What should you know before you buy a bond? You certainly should know the cost of the bond and the schedule of repayments-from this information you can derive the effective interest rate. You should also be aware of the prevailing interest rate and compare it to the interest rate that 55 56 CHAPTER 3 the bond actually pays. (And for a real bond you should have some idea of the risk of default, as well. Bond ratings are in the public record and may be easily obtained). You should also know how future changes in the prevailing interest rate will affect the value of your bond if you sell it before it matures.
If you invest your money at an annual i percent interest rate it will take approximately 701 i years for your money to double. 75 years. ) The formula is only an approximation but is accurate for interest rates that do not exceed 10 percent. 4 (it is assumed that you start with a principal 0[$1). Let's see how the formula is applied in practice. Suppose a house is purchased for $200,000 and sold twenty years later for $400,000. How could you approximate the annual rate of growth? Since the doubling time was twenty years the approximate rate of growth is 70120 percent or 31h percent per year.
The Math of Money: Making Mathematical Sense of Your Personal Finances by Morton D. Davis
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