Maths for finance

Question 1

what is simple interest?

Answer 1

the same amount of interest is paid in each time period. the original investment remains unchanged

Question 2

an example of simple interest

Answer 2

£500 invested at an annul rate of 1.2%
interest after 1 year = 500x1.012= £506-500= £6
interest after 8 years = 6x8=£48

Question 3

what is compound interest?

Answer 3

at the end of the time period, the interest added onto the investment. in the next time period, the interest is calculated on the new amount

Question 4

an example of compound interest

Answer 4

£500 invested at annual compound rate of 1.2%
interest after 8 years = (500x1.012)8 = 550.07
550.07-500= £50.07

Question 5

what is percentage change?

Answer 5

difference in amounts/orginal amount x 100

Question 6

an example of percentage change

Answer 6

was £29.99 now £19.99
difference = £10 original amount = £29.99
10/29.99 x 100 = 33%

Question 7

how to work out percentage profit/loss?

Answer 7

profit/ original x 100

Question 8

what is VAT?

Answer 8

value added tax (20%)

Question 9

an example of working out a price excluding VAT

Answer 9

£299 = 120% 
299/120% = 2.4916 = 1%
2.4916 x 100= 249.16 = 100% 
OR 
299/ 1.2 = £249.16= £249.20

Question 10

an example of reversed percentages

Answer 10

train fare price increased by 2.5% now costs £66.42 what was the original cost?

66. 42 = 102.5%
67. 42/1.025= 64.80