The Biz of Pacelinebiz

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Numbers, Numbers, Numbers

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Numbers

If you gave me a penny on the first of the month, would you agree to double the amount you give me every day until the end of the month?  I hope so, because if you did I would be rich.  See below.

Numbers

I know it is just mathematics but I find that example amazing.  Sure, go ahead and make nerd jokes I deserve it.

If you invested $502.14 every month (not an insurmountable sum) at a 6% rate of return beginning when you were 20 you would have 1 million dollars when you were 60.  This is an amazing fact to me and shows the value of slow but steady saving and the power of compound interest.  You would have deposited $241,027.20 and the $758,972.80 difference would be your 6% return on investment after compounding.

The rule of 72’s is also interesting.  Based on that rule, a dollar invested at 6% interest will double in 12 years.  Looking at it another way a dollar in 12 years will be worth half its original value with 6% inflation.  Click here to read more.

 There is another interesting number-related item that I would like to share with you before I end today’s blog.  Does it make sense to you that there is about a 60.2% chance that any naturally occurring number has a first digit of 1,2 or 3?  Most people would expect that the first number of a number (1 – 9) would occur in about the same amount or about 11.1% for each number.  That is not true.  What I mean by a naturally occurring number is that it is not created or assigned like telephone numbers or social security numbers.  Also, these naturally occurring numbers can’t have an upper or lower limit or some other restriction.  An example is if you looked at all numbers  for interstate speeding ticket speeds it would probably have a high concentration of first numbers in the 7’s or 8’s meaning tickets were written for going 70 – 80 something miles per hour.  

Naturally occurring numbers are found in financial data (the world I live in) in the form of vendor or customer invoice amounts, amounts due from or to a vendor or customer and sales volume etc.  Read about expected digital frequencies, an interesting discovery explained by Benford’s law in a Journal of Accountancy article by Mark Nigrini.  It is useful in fraud detection and for identifying errors, irregularities or manipulation of data among other things.

Have a great week pondering numbers and what they mean.  I know I will.

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Written by pacelinebiz

August 6, 2012 at 8:05 am

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