# MATH103 Application of Consumer Mathematics in Starting a New Business

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*timer*Asked: Mar 5th, 2019

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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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