Interest and Depreciation

Question 1

Simple interest

Answer 1

I = Prn
A = P + I
I – Interest (simple or flat) is the amount earned for the use of the money
P – Principal is the initial amount of money borrowed
r – Rate of simple interest per period expressed as a decimal
n – Number of time periods
A – Amount or final balance

Question 2

Loan repayments

Answer 2

Loan repayment = Total to be paid ÷ Number of repayments

Question 3

Simple interest graphs

Answer 3

1. Construct a table of values for I and n using I = Prn.
2. Draw a number plane with n the horizontal axis, I the vertical axis.
   Plot the points and join them to make a straight line.

Question 4

Percentage increase

Answer 4

1. Add the % increase.
2. Multiply the new percentage by the amount.

Question 5

Percentage decrease

Answer 5

1. Subtract the % decrease from 100%.
2. Multiply the new percentage by the amount.

Question 6

Calculating GST

Answer 6

To calculate the GST, find 10% of the pre-tax price.

To calculate the total cost of an item, add the GST to the pre-tax price.

To calculate the pre-tax price given the total cost of an item, divide the total cost by 110%

Question 7

Calculating Value Added Tax (VAT)

Answer 7

To calculate the VAT, find the VAT rate of the pre-tax price.

To calculate the total cost of an item, add the VAT to the pre-tax price.

To calculate the pre-tax price given the total cost of an item, divide the total cost by (100% + VAT rate)

Question 8

Straight-line depreciation - formula

Answer 8

S = V0 – Dn
S – Salvage value or current value
V0 – Purchase price of the item
D – Depreciated amount per time period
n – Number of time periods