Financial planning

*For proper financial planning you must know all these 10 formulas .*
*1. Compound Interest*
Formula:
A = P * (1+r/t) ^ (nt)
Where
A = amount after time t
P = principal amount (your initial investment)
r = annual interest rate (divide the number by 100)
t = number of years
n = number of times the interest is compounded per year
*2. Post Tax Return*
Formula:
Return = Interest rate - (Interest rate*tax rate)
*3. Inflation*
Formula:
Future Amount=Present amount*(1+inflation rate)^number of years
*4. Purchasing Power*
Formula:
Future Value=Present value/(1+inflation rate)^number of years
*5. Effective Annual Rate*
Formula: Effective Annual Rate = (1+(r/
n))^n)-1*100
Where
r = nominal return divided by number of times compounding is done in a year
n = number of times compounding is done in a year
*6. Rule of 72*
The thumb rule is divide 72 by the interest rate
EXAMPLE
If you are assuming a 12 per cent return on your investment,
the number of years in which the money will double is
= 72/Interest rate = 72/12 = 6 years
*7. Compounded Annual Growth Rate (CAGR)*
Formula:
CAGR=((FV/PV)^(1/n)) - 1
Where
FV is the investment's ending/maturity value
PV is the investment's beginning/opening value
n is the duration in years
*8. Loan EMI*
Formula:
EMI= (A*R)*(1+R) ^N/ ((1+R) ^N)-1)
Where
A = Loan amount
R = Interest rate
N = Duration
*9. Future Value of SIP*
Formula:
S = R((1+i)^n-1/i) (1+i)
Where
S = Future value of investment
R = Regular monthly investment
i = Interest rate assumed /12
n = Duration (number of months or number of years *12)
*10. Liquidity Ratio*
Formula:
Liquidity Ratio = Total liquid assets/Total current debt