Chapter 1: Interest And Depreciation

Question 1

what is the simple interest formula? Explain what each pronumeral in the formula means.

Answer 1

I = PRN
Where:
I = Interest earned
P = Principal (initial investment)
R = Rate (%)
N = Number of years

Question 2

What is the compound interest formula? Explain what each pronumeral means.

Answer 2

I = P(I + R)^N
Where
I = Interest earned
P = Principal (initial investment)
R = Rate (%)
N = Number of years

Question 3

What is an income?

Answer 3

A consistent flow of money.

Question 4

What are different examples ways to earn money?

Answer 4

• Office jobs
• Commissions
• Piece-work
• Annual leave loading
• Retainer
• Profit
• Wages
• Salaries

Question 5

What is a wage?

Answer 5

A set weekly or daily income.

Question 6

What is a salary?

Answer 6

A set monthly or yearly income.

Question 7

What is an income?

Answer 7

Any source of income.

Question 8

What is a profit? How can we calculate profit?

Answer 8

Selling price minus the buying price.

Question 9

What is a loss? How can we calculate loss?

Answer 9

Selling price minus the cost price (cost being greater than the selling price).

Question 10

What is commonly considered to be overtime?

Answer 10

Over 38 hours in one working week.

Question 11

What is time and a half? How can you gain time and a half.

Answer 11

Time and a half is where income is multiplied by 1.5 instead of its regular 1. Time and a half is usually set by working 38 – 42 hours in one working week.

Question 12

What is double time? How can you gain double time?

Answer 12

Double time is where income is doubled. Time and a half is usually set by working 42 hours and onwards in one working week.

Question 13

How many weeks are in a year?

Answer 13

52.

Question 14

How many fortnights are in a year?

Answer 14

26.

Question 15

How many months are in a year?

Answer 15

12.

Question 16

How many days are in a year?

Answer 16

365.

Question 17

How many weeks are in a month?

Answer 17

4.

Question 18

How many fortnights are in a month?

Answer 18

2.

Question 19

How many days are in a month?

Answer 19

30 - 31.

Question 20

What is leave loading? What is the average rate of leave loading?

Answer 20

Leave loading occurs around holidays near the end of the working year. Leave loading is a normal weeks rate of pay on top of a 17.5% pay boost.

Question 21

What is pay as you go (PAYG)? What happens if a PAYG estimate is too little or too much?

Answer 21

Pay As You Go is a pay rate calculated by employers. It takes a small amount of money from an employees weekly pay, which will accumulate into the tax meant to be payed at the end of the year.

If a PAYG estimate is too little, a ‘bill’ will be sent to the employee, asking them to pay the remaining amount. If an estimate is too much, there will be a ‘tax refund’, where the overspent money will be returned to the employee.

PAYG is commonly based on fortnightly pay (fun fakt)

Question 22

How do you calculate simple interest?

Answer 22

I = P * r/12 * months

Question 23

How do you calculate compound interest?

Answer 23

I = P (I + r/12)^months

Question 24

What are term payments?

Answer 24

Term payments are the most common forms of purchase. A buyer often pays a sum of the fee outright, whereas the rest is payed over a consistent schedule.

Question 25

What is a deposit (term payments)

Answer 25

A percentage of the fee payed upfront.

Question 26

What is interest (term payments)

Answer 26

A percentage of the fee payed over the course of a consistent time frame.

Question 27

What is depreciation?

Answer 27

When an item loses its value overtime.

Question 28

What is the depreciation formula?

Answer 28

I = P (I - R)^N