Earnings, Interest, and Hire Purchase

Section 1Wages and salaries

A wage is usually based on hours worked or units produced. A salary is a fixed amount paid for a period, such as each month or year. Watch out: if the question gives a monthly salary and asks for annual income, multiply by 12.

Section 2Overtime and gross pay

Overtime is extra pay for hours worked beyond normal hours. It may be paid at a higher rate, such as time and a half. Gross pay is total pay before deductions, so include regular wages, overtime, commission, and bonuses before subtracting anything.

Section 3Commission

Commission is pay based on sales. It is often a percentage of the value sold. For example, if a salesperson earns 6% commission on J$50000 sales, the commission is 0.06 x 50000 = J$3000.

Section 4Simple interest

Simple interest is calculated on the original principal only. The formula is I = PRT / 100, where P is principal, R is annual rate percent, and T is time in years. Here's the trick: if time is given in months, convert it to years before using the formula.

Section 5Compound interest

Compound interest is interest on the new balance after each compounding period. That means the interest itself starts earning interest. The amount formula is A = P(1 + r)^n when r is the rate per period as a decimal and n is the number of periods.

Section 6Depreciation

Depreciation means an item loses value over time. Straight-line depreciation subtracts the same amount each period. Reducing-balance depreciation subtracts a percentage of the current value, so the amount lost gets smaller each period.

Section 7Hire purchase

Hire purchase lets a customer pay a deposit first, then regular instalments. The total hire purchase price is deposit plus all instalments. Easy to mix up - the extra cost of hire purchase is the hire purchase price minus the cash price.