What is Business Mathematics?

THE MATHEMATICS OF BUSINESS

Incurring debt and making a series of payments to reduce this debt to nil is something we all must do in our lifetime as we make purchases that would only be feasible if we are given sufficient time to pay down the amount of the transaction.

This is referred to as 'amortizing' a debt, a term that takes it's roots from the French term ' amortir', which is the act of providing death to something.

The basic definitions required for someone to understand the concept are:
1. Principal - the initial amount of the debt, usually the price of the item purchased.
2. Interest Rate - the amount one will pay for the use of someone else's money. Usually expressed as a percentage so that this amount can be expressed for any period of time.
3. Time- essentially the amount of time that will be taken to pay down (eliminate) the debt. Usually expressed in years, but best understood as the number of and interval of payments, i.e., 36 monthly payments.