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Special Report on

The Rule of 78s

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A conversation with the CEO of a SaaS company today reminded me of the importance of the rule of 78s. What is this “rule”, you ask. If you run a recurring revenue business, it is the most important number you have never heard of. Back to my conversation with the CEO. We were talking about the use of proceeds for the financing she is trying to raise. In her case, the business is break-even, but has the opportunity to grow into some oncoming market demand. So I asked a classic VC question; “Assuming you close the financing in Q4, 2009, what will your 2010 revenues be?” Simple question right? Lets say that this company ...
arrangements. The interest is calculated upon the value of the assets in the same manner as upon money. Interest can be thought of as " rent of money". When money is deposited in a bank, interest is typically paid to the depositor as a percentage of the amount deposited; when money is borrowed, interest is typically paid to the lender as a percentage of the amount owed. The percentage of the principal that is paid as a fee over a certain period of time (typically one month or year), is called the interest rate . Interest is compensation to the lender, and for forgoing other useful investments that could have been made ...
Richard H. Neiman: Consumer Protection: Preempting the Myths ...
We are entering the final stretch in what has been a nearly two-year process to reform the nation's financial system. With powerful interests fighting against reform, it is has been only with the dedication of activists and the public resolve that strong consumer protection has remained on the agenda. The big risk now is that policymakers will loose their nerve at the last minute and compromise on core values. In particular, the power of states to pass laws to protect consumers beyond a federal standard could be bargained away as a concession to Wall Street. As the current Senate debate unfolds, it is important for our ... market research, surveys and trends
Financial Reform Bill, Part 8
This post will be the last in the series. After looking through the original document, there appeared to be a number of provisions that floated outside of the section headings. I’ll address each of them here: NEW OFFICES OF MINORITY AND WOMEN INCLUSION At federal banking and securities regulatory agencies, the bill establishes an Office of Minority and Women Inclusion that will, among other things, address employment and contracting diversity matters. The offices will coordinate technical assistance to minority-owned and women-owned businesses and seek diversity in the workforce of the regulators. I’m not really sure ... market research, surveys and trends


Our Neighborhood Banks:High Cost Loans for Low Income Borrowers
Throughout Texas, many working people turn to pawn shops, finance companies, and check cashing outlets for basic financial services. While check cashers primarily sell people high priced access to their own money, 1 pawn shops and finance companies specialize in high interest loans that often cost more than borrowers can afford to pay. The so-called "fringe banks" 2 advance money to poor and working class people who have little or no traditional collateral and may not meet strict bank underwriting standards. They make home equity loans, small personal loans, and auto loans (you can pawn your car at a pawn shop, 3 borrow against ... industry trends, business articles and survey research
Bank of America Watch by Inner City Press / Fair Finance Watch
Update of April 12, 2010: In the first study of the just-released 2009 mortgage lending data, Inner City Press / Fair Finance Watch has found that Bank of America's Countrywide Bank FSB confined African Americans to higher-cost loans above the Federal defined subprime rate spread 2.11 times more frequently than whites. B of A's Countrywide Bank FSB confined Latinos to higher-cost loans above the rate spread 1.95 times more frequently than whites, the data show. 2009 is the sixth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread. Further studies will follow. Update ... industry trends, business articles and survey research
Insiders are Scooping up this Cash Machine
There are literally thousands of companies that have been built on how people behave. Most of the time, these companies exist to serve people's demands for something convenient, necessary or entertaining. But some companies exist because everyone is prone to mistakes. These are the kinds of investments Peter Lynch always sought out, because they are seen as being somehow distasteful. One such "distasteful" investment is in household budgeting. Most people just plain stink at it. If they aren't prepared when disaster strikes, they need a helping hand. That's where World Acceptance Corporation (Nasdaq: WRLD ) market trends, news research and surveys resources
The Supreme Court's PCAOB Ruling and Wall Street's Self-Regulation
The Public Company Accounting Oversight Board (PCAOB) was created as part of a series of accounting reforms in the Sarbanes-Oxley Act of 2002. PCAOB is composed of five members appointed by the Securities and Exchange Commission (SEC). It was modeled on private self-regulatory organizations (SRO's) in the securities industry -- such as the New York Stock Exchange or the NASD -- that investigate and discipline their own members subject to Commission oversight. The PCAOB is a Government-created entity with expansive powers to govern an entire industry. Every accounting firm that audits public companies under the securities ... market trends, news research and surveys resources


What is the Rule of 78s? Brochure-PDF - Mississippi Department of ...
May 14, 2002 ... The Rule of 78s is commonly, even widely, used but is understood by ... charge refunds using the Rule of 78s except that the twenty (20) day ... technology research, surveys study and trend statistics
DFI: What is the Rule of 78s?
It's difficult to understand; yet nearly all financial institutions use it. In Indiana and other states, it is a method of figuring your cost and refund o finance charges on a precomputed credit transaction. A "precomputed" account is one which the account balance includes the finance charge and each month the full payment is subtracted from the balance. If the account pays off before maturity, a rebate of the unearned finance charge is given based on a method called "the Rule of 78s." The Rule of 78s is commonly, even widely, used but is understood by very few people. It is a method of refunding finance ... technology research, surveys study and trend statistics
Hugh's Mortgage and Financial Calculators
This lists the stops on the Blue Line only from Shrewsbury to Grand Station during the weekdays. This shows the times when the restoration happens on Monday, June 28, 2010, so we will all be ready for the slightly different schedule. You can also find the full PDF on the site, but mine is easier to read if you are a daily Blue Line commuter like me. BMI and BMR calculation - Body Mass Index and Basal Metabolic Rate calculations that also act as metric versus US convertors for height and weight. All in one handy, dandy PHP prgram that lives on my site! MortgageSum Calculator Download - Another satisfied ...
Financing -- Loans: add on interest, add on interest, rule of 78ths
Interest that is added to the principal of a loan. The amount of interest for all years is computed on the original amount borrowed. Example: Abel borrows $1,000 at 8% add-on interest for 4 years. Total interest is $320 (8% of $1,000 for 4 years). Abel will repay the $1,320 total in equal monthly installments. Steer clear of the perilous 'Rule of 78s' By Lucy Lazarony Some auto lenders still use the archaic and costly "Rule of 78s" formula to calculate a rebate of finance charges when a customer pays off a loan early. This rebate is actually a sneaky prepayment penalty. - advertisement - "The Rule of 78s ...
Can someone explain the math rule 78 to me? - Yahoo! Answers
Rule 78 is also called "the sum of the digits." 12 is a number of months in a 1 year loan. Under the rule of 78s, interest is accelerated as follows: You pay 12/78 of the total interest in your first month's payment, 11/78 in your second month, and so on until your last payment contains an interest payment of only 1/78 of the total interest due. If you have a 48-month loan, for example, the sum of the digits 1 through 48 is 1176, so your first payment would be 48/1176 and your last payment 1/1176 of the total interest due. Because the rule of 78s favors the lender if you prepay, critics say it contains a hidden ...