What is Compound Interest?

What is ‘Compound Interest’

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding; the higher the number of compounding periods, the greater the compound interest. Thus, the amount of compound interest accrued on $100 compounded at 10% annually will be lower than that on $100 compounded at 5% semi-annually over the same time period. Compound interest is also known as compounding.


A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is:

A. Rs. 120

B. Rs. 121

C. Rs. 122

D. Rs. 123




What is Sum Of The Years ?

What are ‘Sum-Of-The-Years’ Digits ‘

An accelerated method for calculating an asset’s depreciation. This method takes the asset’s expected life and adds together the digits for each year. So if the asset was expected to last for five years, the sum of the years’ digits would be obtained by adding: 5 + 4 + 3 + 2 + 1 to get a total of 15. Each digit is then divided by this sum to determine the percentage by which the asset should be depreciated each year, starting with the highest number in year 1.

BREAKING DOWN ‘Sum-Of-The-Years’ Digits ‘

It makes sense to use an accelerated depreciation method such as the SYR method when an asset will lose most of its value toward the beginning of its useful life – as is the case with automobiles, for example.
In the five year example above, the SYD method would yield the following depreciation schedule:

Year 1: 5/15 = 33%

Year 2: 4/15 = 27%

Year 3: 3/15 = 20%

Year 4: 2/15 = 13%

Year 5: 1/15 = 7%

The percentages for each year should add up to 100%.


Original cost =Rs.1,26,000: Salvage value = nil: Useful life = 6 years.Depreciation for the 1st year under sum of years digits method will be

a. Rs.6,000

b. Rs.12,000

c. Rs.18,000

d. Rs.36,000








What is Called-up value?

What is share?

The capital of a company is divided into shares. Each share forms a unit of ownership of a company and is offered for sale so as to raise capital for the company.

In financial markets, a share is a unit of account for various investments. It often means the stock of a corporation, but is also used for collective investments such as mutual funds, limited partnerships, and real estate investment trusts.

Corporations issue shares which are offered for sale to raise share capital. The owner of shares in the corporation is a shareholder (or stockholder) of the corporation. A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company, which may not reflect the market value of those shares.

The income received from the ownership of shares is a dividend. The process of purchasing and selling shares often involves going through a stockbroker as a middle man.

Called-up value:

The value of the issued shares that have remained fully or partially unpaid, and whose holders have now been called upon to pay the balance.

Depending on the jurisdiction and the business in question, some companies may issue shares to investors with the understanding they will be paid at a later date. This allows for more flexible investment terms and may entice investors to contribute more share capital than if they had to provide funds up front. The amount of share capital owed by shareholders, but has not yet been paid, is referred to as called-up capital.



A company forfeited 2,000 shares of Rs.10 each (which were issued at par) held by Mr. John for non-payment of allotment money of Rs.4 per share. The called-up value per share was Rs.9. On forfeiture,the amount debited to share capital will be

  1. Rs.10,000
  2. Rs.8,000
  3. Rs.2,000
  4. Rs.18,000


On forfeiture, the share capital account is always with the called value of share

(2,000 x 9) Share Capital A/c Dr. 18,000

(2,000 x 5) To Share forfeiture 10,000

(2,000 x 4) To Calls – in- arrears 8,000

Look For Possibilities

If You Focus On Possibilities You’ll Have More Opportunities.

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Eniac was one of the first computers to list – electronic circuits, which made for lightning fast calculations. At first, Thomas J. Watson, the former chairman of IBM, saw no use for it. He said,” I reached to Eniac the way some people probably reacted to the Wright brothers’ airplane. It didn’t move me at all…. I couldn’t see this gigantic, costly, unreliable device as a piece of business equipment.”

A few weeks later, he and his father wandered into a research office as IBM and saw engineer with a high – speed punch- card medicine hooked up to a black box. When asked what he was doing, he said, “Multiplying with radio tubes.” The machine was tabulating payroll at one tenth the time it took the standard punch card machine to do so. Watson recalls, “That impressed me as though somebody had hit me on the head with a hammer.” He said, Dad, we should put this thing on the market! Even if we only sell eight or ten, we’ll be able to advertise the fact that we have the world’s first commercial electronic calculator.”

That’s how IBM got into electronics. Within a year, they had electronic circuits that both multiplied and divided, and at that point, electronic circuits that both multiplied and divided, and at that point, electronic calculators become truly useful. Thousands of the IBM 604 were sold.

What wasn’t yet obvious to Thomas Watson was obvious to the engineer working In the research department. Always keep your eyes and ears open; you never know what you might discover. Look for the possibilities around you.

Believe in Your dream

The Future Belongs to Those Who Believe In The beauty Of Their Dreams.


Grace Hopper was born with a desire to discover how things worked. At age seven, her curiosity led her to dismantle every clock, in her childhood home! When she grew up, she eventually completed a doctorate in mathematics at Yale University. During World II, Grace joined the navy and was assigned to the navy’s computation project at Harvard University. There she met “Harvard Mark I,” the first fully functional digital computing machine. Once again, Grace set about to learn how something worked.

Unlike the clocks in her childhood home, however, ”Harvard Mark I” was composed of 750,000 parts and 500 miles of wire! While most experts believed computers were too complicated and expensive for anyone but highly trained scientists to use, Grace had her own idea. Her goal was to make them easier to operate, so more people could use them. Her work gave rise to the programming language COBOL.

As late as 1963, each large computer had its own unique master language. Grace became an advocate for a universally accepted language. She had the audacity to envision a day when computers would be small enough to sit on a desk more powerful than Harvard Mark I, and useful in offices, schools, and at home. At the age of seventy nine, she retired from the navy with a rank of rear admiral. But more important to her, she had to see her dream of personal computers come true!


Believe in your dreams. With God, all things are possible.

Long – term Vision


In 1877, George Eastman dreamed that wonderful world of photography might be accessible to the average person. At the time, photography working outdoors had to carry multiple pieces of bulky equipment and a corrosive agent called silver nitrate. Eastman theorized that if he could eliminate most of this equipment, he could make his dream a reality.

Working in a bank by day, he spent his nights reading books on chemistry and magazines about photography. He took foreign language lessons so he could real information published in France and Germany. Then with a partner, he began his own company in 1881. Almost immediately, a problem arose with the new “dry plates” he had invented. Eastman refunded the money to those who had purchased them and returned to his lab. Three months and 472 experiments later he came up with the durable emulsion for which he had searched!

Eastman spent, many nights sleeping in a hammock at his factory after long days assigning equipment. To replace the glass used is photographic plates, he created a roll of thin, flexible material now known as film. To replace heavy tripods, he developed a pocket camera. By 1895, photography was at last available to the “common man.

George Eastman’s long term vision kept him motivated even when 471 experiments faded.

Keeping your ultimate dream in mind, set short, attainable goals, and before you even know it, your vision will become a reality!

Don’t Failures Keep You Down

“Failure Is Not The opposite Of Success, It Is Part Of Success.”

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Did you fall down the first time you tried to walk? Most likely. Did you feel as if you were drowning the first time you ventured into deep water? Probably. Did you hit the ball the first time you swung a bat? Probably not.

R.H Macy failed times before his store in New York became popular. English novelist John Creasey received 753 rejection slips prior to publishing 564 books.

Babe Ruth struck out 1,330 times, yet he is best known for hitting 714 home runs.

Michael Jordan didn’t make the cut for his high – school basketball team when he was a sophomore. He cried over his failure but then tried harder. The next year he made the team and never looked back.

One salesman noted that he made one sale for about every ten “ cold calls” he made. Each sale averaged about $1,000. Rather than be discouraged when he was turned down, he’d simply say, “Well, I just made $ 100.” He saw himself as one – tenth closer to a commission.

Don’t expect never to fail. Expect occasional failure, learn from it, and move a little closer to your goal.

Losers quit when they fail. Winners fail until they succeed.

Make the Most of Your Situation.

“Where There’s This Much Manure, There’s Gotta Be A Pony”


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A story is told of identical twins. One was a hope – filled optimist who often said “Everything is coming up roses!” The other was a sad and hopeless pessimist who continually expected the worst to happen. The concerned parents of the twins brought them to a psychologist in hopes he might be able to help them balance their personalities.

The psychologist suggested that on the twin’s next birthday, the parents put them in separate rooms to open their gifts. “Give the pessimist the best toys you can afford,” the psychologist said,” and give the optimist a box of manure.” The parents did as he said.

When they peeked in on the pessimistic twin, they heard him complaining,” I don’t like the color of this toy. I’ll bet this toy will break! I don’t like to play this game. I know someone who has a bigger toy than this!”

Tiptoeing across the corridor, the parents peeked in and saw their optimistic son gleefully throwing manure up in the air. He was giggling as he said” You can’t fool me! Where there’s this much manure, there’s gotta be a pony!”

Get Back Up

If one dream dies, dream another dream. If you get knocked down, get back up and go again- Joel Osteen



The difference between success and failure is often the ability to get up just up one more time you than fall down!

Moses easily could have given up. He had an “interrupted “childhood and lived with a foster family. He also had a strong temper, a stammering tongue, and a criminal record, but when God called to him, Moses ultimately said yes.

Joshua had seen the Promised Land and believed they could conquer their enemies and possess the land. Yet he was forced to wander in the wilderness for forty years with cowards who didn’t believe. He could have given up in discouragement, but he was willing to go when God said to go.

Peter had a hard time making the transition from fisherman to fisher of men. He sank while trying to walk on water, was strongly rebuked by Jesus for trying to tell Him what to do, and denied knowing Jesus in that hour Mein Jesus needed him most. He easily could have seen himself as a hopeless failure. But when the opportunity came to preach the Gospel before thousands on the Day of Pentecost, he rose to the occasion.

No matter what you’ve done, what mistakes you may have made, what errors you may have committed, you’re not a failure until you lie down and quit. Though a righteous man falls seven times, he rises again.


Take the first step

“You never get a SECOND CHANCE to make a first IMPRESSION” __Will Rogers.

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During the late 1960’s a couple was vacationing in the California mountains one day, and they noticed a pleasant – looking young man sitting by a bridge near their hotel, Day after day they saw him sitting in that same spot.

At first they assumed he was fishing, but after taking a closer look, they realized he was doing nothing –just sitting and starting into space. Finally, on the last day of their vacation, they couldn’t stand it anymore. They just had to ask: “Why do you sit in that one spot all day, every day!”

He replied with a smile,’ happen to believe in reincarnation. I believe that I have lived many times before and that I will have many lives following this one. Sol this life I’ m sitting out.”

In reality, it’s impossible for any of us to “sit out” life. Each day, we are either moving forward or backward, getting stronger or weaker, moving higher or lower. Each of us begins every new day with a fresh opportunity to change tomorrow’s” starting point.”

You only have one chance at life, so make it count.