Study Notes
Earnings, simple and compound interest involve calculating wages, salaries, and interest on loans and investments. Understanding percentages is crucial for solving problems related to discounts, profit, and loss.
- Earnings — Money received for work done, usually in the form of wages or salary. Example: A person earns $500 per week for their job.
- Simple Interest — Interest calculated on the original principal only. Example: If you invest 8.
- Compound Interest — Interest calculated on the initial principal and also on the accumulated interest from previous periods. Example: If you invest 8.
- Percentage — A number or ratio expressed as a fraction of 100. Example: A 20% tax on a 200 is deducted.
Exam Tips
Key Definitions to Remember
- Simple Interest: Interest on the original principal only.
- Compound Interest: Interest on both the principal and accumulated interest.
- Percentage: A ratio expressed as a fraction of 100.
Common Confusions
- Mixing up simple and compound interest calculations.
- Misunderstanding how to convert percentages to decimals.
Typical Exam Questions
- What is simple interest, and how is it calculated? Use the formula: Interest = Principal × Rate × Time.
- What is the key difference between simple interest and compound interest? Simple interest is on the principal only, while compound interest is on the principal plus accumulated interest.
- If you invest 150
What Examiners Usually Test
- Ability to calculate simple and compound interest.
- Understanding of percentage increases and decreases.
- Application of formulas to solve real-world financial problems.