Financial Maths

Use simple and compound growth formulae Understand fluctuating echange rates and the implications thereof

Simple Interest: the amount paid or earned for the use of money for a unit of time. SIMPLE INTEREST FORMULA: *hire purchase is always simple interest* A = the final amount P = the principle amount i = the interest rate n = time period of investment (in years)

Compound Interest: Interest paid on the original principal and on interest that becomes part of the account. Compound Interest Formula: *population growth is always compound interest* A = the final amount P = the principle amount i = the interest rate n = time period of investment (in years)

Compound Interest (Example 1) Ex 1: R7500 is deposited into an account with a 6.5 % interest rate for 4 years. Find the amount that results when the interest is compounded:

Time (Years) Balance (1000 dollars)

Exchange Rates are a direct proportion – if the value of one increases, the value of the other will also increase: If $1 = R7,34 then $ x = R 7,34.x Eg. John goes to Italy and buys a leather Jacket for €200. If the exchange rate was €1 = R 9,94, hoe much did John pay for his jacket? € 200 X 9,94 = R 1988,00.