Chapter 1: Interest And Depreciation Flashcards
To learn basic money formulas such as simple and compound interest along with depreciation
what is the simple interest formula? Explain what each pronumeral in the formula means.
I = PRN Where: I = Interest earned P = Principal (initial investment) R = Rate (%) N = Number of years
What is the compound interest formula? Explain what each pronumeral means.
I = P(I + R)^N Where I = Interest earned P = Principal (initial investment) R = Rate (%) N = Number of years
What is an income?
A consistent flow of money.
What are different examples ways to earn money?
- Office jobs
- Commissions
- Piece-work
- Annual leave loading
- Retainer
- Profit
- Wages
- Salaries
What is a wage?
A set weekly or daily income.
What is a salary?
A set monthly or yearly income.
What is an income?
Any source of income.
What is a profit? How can we calculate profit?
Selling price minus the buying price.
What is a loss? How can we calculate loss?
Selling price minus the cost price (cost being greater than the selling price).
What is commonly considered to be overtime?
Over 38 hours in one working week.
What is time and a half? How can you gain time and a half.
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.
What is double time? How can you gain double time?
Double time is where income is doubled. Time and a half is usually set by working 42 hours and onwards in one working week.
How many weeks are in a year?
52.
How many fortnights are in a year?
26.
How many months are in a year?
12.
How many days are in a year?
365.
How many weeks are in a month?
4.
How many fortnights are in a month?
2.
How many days are in a month?
30 - 31.
What is leave loading? What is the average rate of leave loading?
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.
What is pay as you go (PAYG)? What happens if a PAYG estimate is too little or too much?
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)
How do you calculate simple interest?
I = P * r/12 * months
How do you calculate compound interest?
I = P (I + r/12)^months
What are term payments?
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.
What is a deposit (term payments)
A percentage of the fee payed upfront.
What is interest (term payments)
A percentage of the fee payed over the course of a consistent time frame.
What is depreciation?
When an item loses its value overtime.
What is the depreciation formula?
I = P (I - R)^N