Summary Financial Math Gr 12 IEB & DBE notes

Matric
Finance

, Finance formulae
Simple interest: A = P(1 + in)
Hire purchase: A = P(1 + in)
Compound interest: A = P(1 + i) n
Inflation: A = P(1 + i) n
Straight line depreciation: A = P(1 - in)
n
Reducing balance depreciation: A = P(1 - i)
i m
Effective to nominal conversion: (1 + i) = (1 + m )
i m i r
Nominal to nominal conversion: (1 + m ) = (1 + r )
i mxn
Compound interest with period: A = P(1 + m )
Future value in arrears: F = X (1+i) - 1
n

i

Future value in advance: F = X (1+i) - 1 (1 + i)
n

i

Present value in arrears: P = X 1 - (1+i)
-n

i

Present value in advance: P = X 1 - (1+i) (1 + i)
-n

i

Repaid capital portion: Loan amount - outstanding balance
Total amount paid: Instalment amount x number of instalments
Interest paid to date: Total amount repaid - capital amount repaid
Calculation of term: logX = nlogX
n


NB!
Annuities are equal payments made at regular time intervals subject to an interest rate
Always round off to 2 decimals places except when calculating final payment amounts!
When calculating final payment, use the full decimal
Timelines are important and may sometimes be asked for specifically in a question
Make use of the store function on your calculator to prevent inaccurate, rounded answers