Finance / August 5, 2018 / Emmalynn Leach
Usually, whether you can afford a loan depends on whether you can afford the periodic payment (commonly a monthly payment period). So, the most important amortization formula is probably the calculation of the payment amount per period.
Free cash flow is the cash flow available to all investors in a company, including common stockholders. FCF provides a useful valuation technique investors often use to derive a firm's value or the value of a firm's common equity. Often, investors will calculate a firm's value using FCF valuation model techniques and subtract net debt to arrive at a company's equity value in a simple capital structure.
A fixed asset is an item with a useful life greater than one reporting period, and which exceeds an entity's minimum capitalization limit. A fixed asset is not purchased with the intent of immediate resale, but rather for productive use within the entity. An inventory item cannot be considered a fixed asset, since it is purchased with the intent of either reselling it directly or incorporating it into a product that is then sold.
Daily compounding interest refers to when an account adds the interest accrued at the end of each day to the account balance so that it can earn additional interest the next day and even more the next day, and so on. To calculate daily compounding interest, divide the annual interest rate by 365 to calculate the daily rate. Add 1 and raise the result to the number of days interest accrues. Subtract 1 from the result and multiply by the initial balance to calculate the interest earned.
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