Sinking fund is also known as depreciation fund. Sinking Fund is a fund into which a company sets aside its revenue over a period of time, in order to fund a future capital expense or used to replace the asset at the end of its useful life or for gradual repayment of company’s long-term debt.…
Annuity is a fixed sum of money paid to the investor or insurer to a series of annual sums for specific length of time or the rest of their life. In the case of reverse mortgage loan provided to senior citizen against security of their home is another example where loan amount is used to…
EMI is acronym to an equated monthly installment (EMI). It is a fixed amount payable by a borrower to a lender at each calendar month at a stated date. Under this system the principal and interest thereon is repaid through equal monthly interest over the fixed tenure of the loan. EMI is fixed based on…
When a lender grants loan to a borrower, he charges fee (interest) on money lent. The interest payable by the borrower may be simple interest or compound interest. Simple interest means interest charged at flat rate only on the principal amount. In the other words the interest will not be charged on the interest debited…
The concept of compound interest or compounding interest is the interest is added back to the principal sum while charging interest for the next period so that interest is earned on that added interest. That is as a result of reinvesting interest, compound Interest (CI) / Cumulative Interest are calculated both on the principal amount…
A fixed rate loan is a loan where the interest rate on the loan doesn’t fluctuate during the entire term of loan or part of the total term of loan. This allows the borrower to accurately predict their future payments. In floating rate loan (also called variable rate loan) the rate of interest on the…