Mathematics Topic
Interest, Hire Purchase, and Depreciation
- Read notes
- Flashcards
- Quiz
- Confident
Study focus - 3 things
- Simple interest is calculated using principal, rate, and time
- Hire purchase usually includes a deposit plus instalments
- Depreciation is a decrease in value over time, often calculated using percentages
Section 1Simple interest
Simple interest is money earned or paid on the original amount only. Use I = PRT / 100, where P is principal, R is annual rate percent, and T is time in years.
Section 2Compound interest
Compound interest is interest added to the amount, so the next period earns interest on the new total. For yearly compounding, amount = P(1 + r/100)^n.
Section 3Hire purchase
Hire purchase lets a person pay for an item by making a deposit and then paying instalments. Total hire purchase cost = deposit + total instalments. The extra paid is the hire purchase cost minus the cash price.
Section 4Depreciation
Depreciation means an item loses value over time. If a phone worth J$60,000 depreciates by 20%, it loses 0.20 x 60,000 = J$12,000, so its new value is J$48,000.
Section 5Reading money questions
Underline the cash price, deposit, number of instalments, rate, and time. Money problems often look wordy, but they usually break into small calculations.
Examples
Find the simple interest on J$40,000 at 6% per annum for 3 years.
I = PRT / 100 = 40,000 x 6 x 3 / 100 = J$7200.
A television costs J$75,000 cash. Hire purchase requires J$15,000 deposit and 12 instalments of J$6000. Find the extra paid.
Total hire purchase cost = 15,000 + 12 x 6000 = J$87,000. Extra paid = 87,000 - 75,000 = J$12,000.
Now let's water it
Session runs notes to flashcards to quiz back-to-back.