Compound interest and PSC: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
(Create page. Source: Companies House webpage https://www.gov.uk/government/publications/guidance-to-the-people-with-significant-control-requirements-for-companies-and-limited-liability-partnerships)
 
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Compound interest is calculated as ‘interest on interest’ as well as interest on the original principal amount.
''Anti money laundering''


Compound interest per year is the usual quotation basis for periods of more than a year.
A PSC is a Person with Significant Control over a company or a limited liability partnership (LLP).


To calculate compound interest for different periods we compound up or de-compound the interest depending on the relative lengths of the periods being considered.
The concept is designed to detect and deter money laundering.


 
In the UK and other jurisdictions companies and LLPs are required to identify any relevant PSCs and disclose them on the public record.
'''Example 1'''
 
Interest quoted at 6% per annum,
 
compounded annually,
 
for two years maturity,
 
with all of the interest paid at the final maturity,
 
means that the interest paid after two years will be (compounding up for two periods):
 
= ( 1.06 x 1.06 ) - 1
 
= 12.36% periodic interest for the two year period.
 
 
Decompounding is used to calculate periodic interest for a shorter period.
 
 
'''Example 2'''
 
If periodic interest is 12.36% for a two-year period, this means the total accumulated interest payable/receivable at the end of the two years is 12.36%.
 
Decompounding the 12.36% (per two years) to calculate the interest for just one year. One year's interest:
 
= ( 1 + 0.1236 )<sup>(1/2)</sup> - 1
 
= 6.00% per one-year period.




== See also ==
== See also ==
* [[CAGR]]
* [[Anti money laundering]]
* [[Compounding effect]]
* [[Company]]
* [[Day count conventions]]
* [[Know-your-customer]]
* [[Effective annual rate]]
* [[Limited liability partnership]]
* [[Nominal annual rate]]
* [[Periodic rate of interest]]
* [[Periodic yield]]
* [[Simple interest]]

Revision as of 17:52, 16 June 2017

Anti money laundering

A PSC is a Person with Significant Control over a company or a limited liability partnership (LLP).

The concept is designed to detect and deter money laundering.

In the UK and other jurisdictions companies and LLPs are required to identify any relevant PSCs and disclose them on the public record.


See also

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