Financial Sustainability
Team C’s presentation will review 5 financial areas within ABC Co. We will first define financial sustainability; address calculating cost, revenue, and profit, the rule of 72, calculating interest, and compound interest. We will use math concepts and rationale businesses and how companies can use our math concepts and rationale to achieve financial sustainability.
What is Financial Sustainability?
* Define it! * Is it a buzzword? * What does it mean to an individual? * What does it mean to an organization? * Is it important for a business owner to understand financial sustainability in both personal and professional areas?
Financial sustainability has become something of…show more content… The result is the approximate number of years that it will take for your investment to double (Investopedia, 2011).
As analysts, we used basic, intermediate, and advanced math skills and rationale to calculate rule of 72 concepts. First we set up & solved an equation, used natural number exponents, exponential expressions, used the distributive property, followed the order of operations, & worked with percentages, solved the problem and checked the solution to ensure my solution was accurate. Team C disclosed to ABC Company that if they invested their entire profit of $150,000 and wanted to double it, they would need to use the Rule of 72 to decide what interest rate is going to work for them. If the 4% interest rate is going to be used, it will take a total of 18 years to double their profit. To find this out they will need to divide 4 from 72 and the result will be 18. If the 7% interest rate is going to be used, it will take a total of 10.3 years to double the profit. To find this you will need to divide 7 from 72 and the result will be 10.3. We do realize that most companies cannot take 100% of their profits and invest them, so we decided to also review a $25,000 investment.
It’s important to understand how the rule of 72 works.
If an investment of $25,000 earns 9% annual interest approximate the value of the