Category: Prosperity Economics

Calculating Internal Rate of Return

How do you calculate the internal rate of return on an investment when the cash flows vary and you can’t use a typical financial calculator that only functions with the same stream of payments, not a varying stream?  For example, you invest in an oil well where you contribute $100,000 the first year and the second year there is a $20,000 capital call (meaning you contribute $20,000 more). Then in the third year, there wasn’t any income but starting in the fourth year, you received the following stream, $30,000, $25,000,

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How To Figure Out If 12% Annually Is The Same As 1% Monthly?

How do you figure out if 12% annually is the same as 1% monthly? First take a Future Value Calculator on “annual” and put in $100,000 at 12% for 1 year, and it shows the FV to be $112,000.        Then take another Future Value Calculator set on “monthly” and put in $100,000 at 12% for 12 months, and it shows the FV to be $112,683.        Most banks compound monthly, a few savings and loans compound quarterly, yet it is common to express interest rates

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How Much Interest Do I Save By Paying My Life Insurance Premium Annually?

How do you calculate the cost of paying a life insurance premium monthly instead of annually?  Get a Rate Calculator from www.truthconcepts.com.  Put the annual premium in the Present Value as a negative number (which changes it to Loan Balance) since the insurance company is loaning you the annual premium and you pay them back monthly.  Then make the mode “monthly” and “beg” for beginning of year since the insurance company loans you money at the beginning of the period.  Put the monthly premium payment in Monthly Payment box and

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How Do You Know Which Is More Important In Building Wealth, Money Saved Or The Rate Of Return?

How do you know which is more important in building wealth, money saved or the rate of return?  From www.truthconcepts.com  in the calculator called Maximum Potential we can see that it is the money you save and the reduction of costs that matter, not the rate of return. We’ll look at a Period of 35 years with a personal example where you said your income was $100,000.  It should increase at least 4% a year if not more and for starters we’ll set an after tax Earnings rate of 5%. 

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Financial Planning vs. Prosperity Economics

Financial Planning vs. Prosperity Economics   Meets needs and goals only   Maximizes every dollar Retirement oriented   Abundant/Freedom oriented Product oriented (only what you buy)   Strategy oriented (what you do) Accumulate money   Accelerate money Rate of return focuses   Opportunity cost recovery focused Institutions control your money   You control your money Uncoordinated   Integrated Micro (vacuum) based   Macro (big picture) based Net worth is measurement   Cash flow is measurement Money stays still   Money moves Dollars do only one job   Dollars do many

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How 0% Financing On A Car Isn’t Always 0%!

Since we are writing this in 2009, there are some true 0% car loans in the market place due to the economy in general and the condition of the automobile industry in particular.  However, knowing the whole truth about your money is critical in knowing how best to finance a car and there is much misinformation around this area.  Don’t be sucked into making higher payments because it’s only 0%! What happens to car buyers is they get focused on the payment.  A car dealership has a different price for

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