# Financial Calculations

Q:

## What is the definition of "compound interest"?

A:

Compound interest is a financial term used to describe the process where the interest earned on a principal investment over a set period of time is added to the principal amount. The interest payable for the following periods is recalculated on the sum of the original investment and the previous interest earned. The word "compound" refers to the magnified effect that this method has on an investment's growth potential.

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• #### Q:How do you calculate interest expense?

A: Interest expense is calculated as the interest rate multiplied by the amount of the outstanding principal of the debt. Defined by Investopedia, interest expense is the cost incurred by an entity on borrowed funds.
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• #### Q:What is profit maximization?

A: In economics, profit maximization refers to the process by which a business assesses the price and output of goods in order to ensure the greatest profit. During the assessment, businesses will determine the expense of fixed and variable costs during production in order to ascertain financial viability. There are two main ways a business achieves this total revenue-total cost and marginal revenue-marginal cost.
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• #### Q:What is analytical research?

A: Analytical research is a specific type of research that involves critical thinking skills and the evaluation of facts and information relative to the research being conducted. A variety of people including students, doctors and psychologists use analytical research during studies to find the most relevant information. From analytical research, a person finds out critical details to add new ideas to the material being produced.
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• #### Q:How can one live cheaply?

A: There are many ways to live cheaply. Before you spend any money, ask yourself if you really need the thing you are considering purchasing. Before shopping, write down all the items you really need and stick to the list. Doing so will help you save a lot of money and live much more frugally,
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• #### Q:What age group spends the most money?

A: According to The Daily Beast, Americans between the ages of 50 and 60 years old spend the most money, about 74 percent more than Americans aged 18 to 25 in 2010. Each group divides its expenditures in a different way.
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• #### Q:How many pennies are in \$1 million?

A: There are 100 million pennies in \$1 million. Since there are 100 pennies in each dollar, multiplying 100 pennies per dollar times \$1 million yields 100 million pennies.
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• #### Q:What are financial resources?

A: Business Dictionary lists financial resources as funds that are available to a business for spending. These funds may come in the form of money, liquid securities or credit lines.
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• #### Q:What is the importance of financial accounting?

A: Financial accounting is important because it provides an organization's stakeholders with business statements, allowing them to know if the organization is making or losing money. This information is essential in determining if a company is able to maintain profitability, according to Accounting-Careers-Guide.com.
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• #### Q:What is net monthly income?

A: Net monthly income refers to the paycheck employees receive from their employers. Employers deduct taxes and Social Security contributions before creating checks for their employees.
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• #### Q:What is the formula for total revenue?

A: According to AmosWeb, total revenue is calculated by multiplying the price received from the product times the quantity of the product sold at that price. Total revenue is usually depicted as a total revenue curve with it being directly related to marginal revenue and average revenue.
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• #### Q:What is the definition of "compound interest"?

A: Compound interest is a financial term used to describe the process where the interest earned on a principal investment over a set period of time is added to the principal amount. The interest payable for the following periods is recalculated on the sum of the original investment and the previous interest earned. The word "compound" refers to the magnified effect that this method has on an investment's growth potential.
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• #### Q:How do you calculate food cost percentage?

A: StarChefs explains that food cost percentage is figured by taking the total beginning inventory cost plus purchases minus the ending inventory costs; then dividing that number by food sales.
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• #### Q:What is a home construction cost calculator?

A: A home construction cost calculator is a calculator used to estimate the cost of constructing a new house. The calculator helps a person to determine how big the house, the kitchen and the rooms should be. It also asks a person what kind of finishing he wants around the house.
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• #### Q:What are hedging techniques?

A: Hedging techniques are strategies and tactics employed by investors to reduce financial risk. Pairing, short-against-the box, exchange-traded funds, futures and options are the most commonly used to predict and reduce financial risk.
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• #### Q:What are the remedies to measure and control inflation?

A: The rate of inflation is a measure of the Consumer Price Index, according to Saint Joseph’s College. Inflation control is a part of the monetary policy set by the Federal Reserve that involves the fluctuation of interest rates and the selling of bonds through the U.S. Treasury.
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• #### Q:How is a sales commission calculated?

A: A sales commission is calculated using the commission structure agreed upon between the owner or manager of a business and a salesperson. This commission structure is sometimes received as a one-time payment. However, it can also be received as a recurring commission over the life of the sales account.
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• #### Q:How much do teens spend on clothes per year?

A: According to Statistic Brain, as of 2014, total spending by American youths aged 13 to 19 years is approximately \$258.7 billion annually. According to Business Insider, teens spend 40 percent of their money on clothing. If that's correct, it translates to \$103.48 billion spent by teens annually for clothes.
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• #### Q:Is inventory a current asset?

A: The U.S. Division of Trading and Markets defines current assets as the resources that are reasonably expected to be sold for cash or other receivables within one calendar year. If the inventory for a business falls under this category, then that inventory could be considered a current asset. Morningstar lists inventories among other common line items in the category of current assets, which also include accounts receivable, short-term investments and cash or cash equivalents.
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• #### Q:What items make up the cost of goods sold?

A: The items that make up the cost of goods sold are the materials, equipment and labor that go into creating the goods. Many marginal cost items affect the actual cost of producing and selling items.
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• #### Q:How much does it cost to buy a star?

A: The cost to buy a star ranges from \$19.95 to \$50 and higher, depending on the specific package chosen. Certain star packages include medallions while others include a commemorative plaque. It is also possible to name the star specifically for a particular person.
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• #### Q:How do you calculate a percentage of a dollar?

A: To calculate a percentage of \$1.00, treat it as 100 pennies. The percentage sought is equal to the same number in cents. According to Math Is Fun, "percent" is a number per 100, so treating \$1.00 as a 100 pennies makes the math simple.
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