# MATH103 Application of Consumer Mathematics in Starting a New Business

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Doctor_Ralph
School: Duke University

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Running Head: CONSUMER MATHEMATICS AND INTEREST RATE

Application of Consumer Mathematics in Starting a New Business
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CONSUMER MATHEMATICS AND INTEREST RATE

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Part 1: Topic Introduction and Historical Context
When staring a new business, one needs to raise capital for the bussing startup
and also undertake numerous calculations during the business planning phase.
Mathematics is applicable in drawing the business plan for the new venture to ascertain
the cost of capital, to appraise the viability of the proposed business plan, and draw an
elaborate financial plan for the business. In all these instances, one aspect that comes into
plays the costs of the capital to be invested in the business which is calculated in form of
the rate of interest charged on the capital borrowed form financial institutions.
Interest rates refer to the amount charged on the principal amount lent or
borrowed for the purpose of starting up a business. The interest rates depend on the
prevailing business conditions, the duration of the borrowing, the principal amount
borrowed, and the compounding frequency. The interest rate may also refer to the amount
of fees paid to an entrepreneur by a deposit-taking financial institution on the amount
deposited in an account (Cairns, 2018). In a new business startup, mathematics is used to
ascertain the actual amount of interest rate and hos such amounts affects business
decisions at any given time.
Using mathematics to calculate the rate of interest rate attributed to a new
business startup is a business topic that bears a great level of significance to individuals
and institutions. It is used by new business ventures to understand fiscal and monetary
policies during so that they can undertake accurate budgeting and resource allocation. In
addition, mathematics is used to understand how interest rate charged on startup capital
affects the financial stability of a country through various measures that either increase or
decrease in the rate of interest in the country (Papadamou & Markopoulos, 2018). Among

CONSUMER MATHEMATICS AND INTEREST RATE

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the key business issues that relate to interest rates include inflation, recessions,
depression, and bond and stock markets. The bottom line is that a high rate of interest
rates will reduce the rate of investment while a low rate of interest increases the rate of
investment.
Studying the issues that relate to interest rates attributed to startup capital for new
business ventures is important because it helps individuals and government agencies to
take control of investment, expenditure, savings, and general GDP growth and
development. It is essential to note that the prevailing rates of interest rates are a factor in
the real GDP of a county, thus making it essential to have a clear understanding of the
factors that relate to GDP (Cairns, 2018). In addition, globalization, foreign direct
investment, taxation of, and stabilization of the financial status of a country solely depend
on the understanding of the factors and issues that relate to new business ventures.
Consequently, there is a need to study the issues to help in making an informed decision.
One of the branches of mathematics that may ...

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Anonymous
Thanks, good work

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