Inflation adjustments for 2019, released recently by the IRS, are slightly lower than they might otherwise have been, due to a new calculation method. Increases are now determined using the chained consumer price index (C-CPI), which recognizes that when certain prices rise, consumers find cheaper alternatives. Among this year’s adjustments: Income tax brackets Capital gains …Read More
Last time, we left off with a homework problem. Now a homework problem, the solution to which will be given next time. Here’s the problem: Your VP for development asks you to determine the present value of a $1 million bequest to be received under the will of a living individual aged 79. Question: What …Read More
Last time, we looked at two concepts: compound interest and present value. Turns out they’re two sides of the same coin. If you grasp the idea of compound interest, you also grasp the idea of present value, maybe without realizing you do. Compound interest tells us what $1 (or $1 million) will grow to after …Read More
Compound interest theory is at the center of financial analysis. What is compound interest? It’s the interest earned on money invested over time. Invested at some fixed interest rate. Let’s assume $1 is invested at 6% interest (.06 mathematically) for exactly one year. At the end of the year, the $1 has grown to $1 …Read More