# Ch 17: Overview of Financial Mathematics

### About This Chapter

## Overview of Financial Mathematics - Chapter Summary

This chapter provides a comprehensive overview of financial mathematics through a series of bite-sized lessons and self-assessments. Explore the chapter at your own pace to review financial formulas, definitions, rates, expenses and much more. Upon completion of the chapter, you should be able to:

- Calculate depreciation expense
- Find simple, nominal and real interest rates
- Use compounding interest formulas
- Calculate internal rate of return, net present value and future value
- Figure out monthly loan payments and mortgage amortization
- Reduce balance loans
- Define perpetuity
- Solve problems involving economic profit, capital losses and annuities

When you're finished with a lesson, try the accompanying self-assessment quiz to make sure you fully understand the information. You can also take the chapter exam to practice solving financial mathematics problems. If you have a question, simply submit it one to our subject-matter experts. Finally, you can review these materials wherever and whenever it's convenient using your computer or mobile device.

### 1. How to Calculate Depreciation Expense: Definition & Formula

As property wears out, it loses some of its value, which is called depreciation. In this lesson, we will learn three of the most common methods of calculating depreciation expense, including the straight-line method.

### 2. How to Find Simple Interest Rate: Definition, Formula & Examples

When we borrow a certain sum of money over a period of time, we agree that we will pay it back, along with a fee, known as the interest owed. Similarly, when we invest a sum of money in a savings account, the account earns us interest. This lesson will show you how to calculate a certain type of interest called simple interest.

### 3. Compounding Interest Formulas: Calculations & Examples

Compound interest is a great way to have your money work for you. In this lesson, find out the formula for calculating compound interest and practice using the formula with several examples.

### 4. Nominal Interest Rate: Definition & Equation

Understanding interest rates is a vital part of personal and business financial management. In this lesson, you'll learn about the nominal interest rate and how to calculate it from different perspectives. A short quiz follows the lesson.

### 5. Real Interest Rate: Definition & Calculation

An investment that pays 10% interest doesn't guarantee that you'll have a 10% increase in purchasing power. In this lesson, you'll learn about the real interest rate and how to calculate it.

### 6. How to Calculate Internal Rate of Return: Definition & Formula

In this lesson we will be discussing internal rate of return. We will start by defining the concept. We will then look at the formula used to calculate internal rate of return. Finally, we will complete the lesson by using the formula to calculate the internal rate of return for a project.

### 7. How to Calculate Net Present Value: Definition, Formula & Analysis

The value of money changes over time. If you spoke to your parents or grandparents about what things cost when they were children, you will see a big difference. This concept is called net present value.

### 8. How to Calculate Future Value: Formula & Example

This lesson will give an overview of and explain the future value formula. Also in this lesson, various examples will be explored using the future value formula.

### 9. Calculating Monthly Loan Payments

Watch this video lesson and learn how you can calculate your monthly payment when you are thinking of purchasing a car. Okay, you can also use this formula whenever you are getting a loan!

### 10. How to Calculate Mortgage Amortization

In this lesson, we will briefly discuss what an amortizing loan is and show how to calculate a borrower's monthly payment on a fixed-rate mortgage using the loan information.

### 11. How to Solve Problems Involving Reducing Balance Loans

Software can be used to solve problems involving reducing balance loans. For instance, Microsoft Excel has a built-in amortization function, which can easily calculate payments on a loan with a fixed payment schedule.

### 12. How to Calculate the Present Value of an Annuity

After watching this video lesson, you should know how to calculate how much an annuity is worth at any given time. Learn how to use the formula to calculate the current worth of an annuity that you may have.

### 13. What is a Perpetuity? - Definition & Formula

This lesson defines and explains what a perpetuity is. It also provides examples of perpetuities and introduces a formula to calculate the present value of a perpetuity.

### 14. How to Calculate Economic Profit: Definition & Formula

Learn what economic profit is and how it's different from standard accounting profit in this lesson. Find out the formula for calculating economic profit and why it's possible to have a positive accounting profit and a negative economic profit.

### 15. How to Calculate Capital Losses: Definition, Formula & Example

Every once in a while, a business takes a financial loss when disposing of capital assets. Fortunately, these losses can be used to reduce tax bills. In this lesson, we will review how capital losses work for a corporation.

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### Other Chapters

Other chapters within the CLEP College Mathematics: Study Guide & Test Prep course

- Foundations of Math Overview
- Basic Math Operations
- Basic Measurement in Math
- Linear Equations Overview
- Inequalities Overview
- Graphing and Factoring Quadratic Equations Overview
- Imaginary & Complex Numbers
- Exponents
- Polynomial Properties
- Rational Expressions & Practice
- Basic Functions Overview
- Understanding Exponentials & Logarithms
- Basic Mathematical Logic
- Understanding Sets
- Data Analysis in Math
- Foundations of Probability
- Geometry Foundations
- CLEP College Mathematics Flashcards
- Additional CLEP College Mathematics Flashcards