Summary Financial math Gr 11 IEB notes

Financial
maths

, Financial
Interest
maths
Simple interest
Linear growth
Accumulative amount -

A = P(1+in) Number of years

Used for hire-purchase agreements Principle amount Interest rate

Eg.1 Sage wants to purchase a bed for R8500. She pays a deposit of 5% and
finances the remainder with a hire-purchase loan. Determine the Monthly
repayments if she is offered an interest rate of 12.7% p.a. over 2 years.
A = P(1+in) A= ?
A = 8075(1+0.127x2) P= 8500- 425 (deposit)
A= 10126.05 I= 12,7% = 0,127
MI= R421,92 N= 2
b) Calculate the total amount sage would have spent on the bed once it is
fully paid off.
Total amount = A+deposit
= 10126.06 + 425
= R10551.05 spent to purchase the bed


Compound interest N
Exponential growth A = P(1+i)
Always use compound formula unless hire-purchase or otherwise stated
Eg.1 Megan is budgeting to buy a small train in 3 years and will require a deposit of
R12000. How much should she deposit in the bank now if she is offered an interest
rate of 3,5%? A= 12000
N
A = P(1+i) P= ?
3
12000= P(1+0.035) I= 3,5% = 0,035
3 3
(1+0.035) (1+0.035) N= 3
P= R10823.31