Financial Maths

Question 1

What is the compound interest formula?

How to you get interest out of the formula?

Answer 1

(a) A= P(1 + r) to the power of n

(b) I= A - P

Question 2

How do you find the effective interest rate?

Answer 2

Ref= (I1/P) x 100

Question 3

How do you find the effective interest rate as a percentage?

Answer 3

Ref= [(1 + R/n) to the power of n - 1] x 100

Question 4

What is the straight line depreciation formula?

How do you get the written down value in dollars after ‘T’ years?

Answer 4

(a) Dt= PRT

(b) Vt= P - Dt

Question 5

What is the reducing balance depreciation formula?

Answer 5

Vt= P(1 - R) to the power of T

Question 6

What’s another expression of straight line depreciation?

What’s another expression of reducing balance depreciation?

Answer 6

(a) depreciation at a percentage of its prime cost

(b) depreciation at a percentage of its reduced value every year

Question 7

How do we get total possible depreciation?

How do we get unit cost depreciation?

How do we get THE depreciation?

Answer 7

(a) prime cost - scrap value
(b) a/expected life
(c) b x number of units of work done

Question 8

What is the growth formula?

Answer 8

A= P(1 + r) to the power of n

Question 9

What is the decay formula?

Answer 9

A= P(1 - r) to the power of n

Question 10

What is the simple interest formula?

How do you get the amount from simple interest?

Answer 10

(a) I= PRT

(b) A= P + I