Basic concept of interest and swell
What is capital?
Capital is durable goods used in order to produce opposite goods and services.
worth and rentals on investment
Capital is bought and sold in capital market; some capital is rented out by its owners
Ex: an flat that is owned by Ms, landlord might be rented out for a year to a student, and the monthly birthment of 800dollars per month would distinguish a rental.
Capital vs. pecuniary assets
Tangible assets: assets that have a physical form. Tangible assets include both fixed assets, such(prenominal) as machinery, buildings and land, and current assets, such as inventory. The opposite of a tangible asset is an intangible asset. Nonphysical assets, such as patents, trademarks, copyrights, goodwill and brand recognition, are all fonts of intangible assets.
The stray of diminish on investment
Suppose that you own some capital and rent it out or that you have some immediate payment and lend it to a bank or to a elegant business. You will naturally want to know what you will pay to borrow or how much you earn by modify .This amount is called the rate of reproduction on investment.
The rate of return on investment is the price of borrowing or lending money (interest rates).
Rate of return on capital
Lets consider the example of a rental car company .
xxx company demoralises a used car for 20000dollars and rent it out, after subtracting all expenses and presumptuous no change in the cars price, the xxx company earns a net rental of 2400dollars each year, so the rate of return is 12percent.
2400/20000=12percent
The rate of return=dollars per period /dollars
Example: I buy a plot of land for 100.000dollars and sell lit a year later for 110.000dollars of there are no other expenses the rate of return on this investment is 10.000dollar per year /100.000 or 10 percent .
Financial assets and interest rates
For the case of financial assets, we use a different set of terms when measuring...If you want to get a full essay, order it on our website: Ordercustompaper.com
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