Financial Mathematics
Financial mathematics applies number skills to real-life money situations including profit, loss, budgeting, and simple interest. These skills help in everyday financial decisions.
What You Need to Know
Key Concept Diagram
Profit = selling price - cost price; if selling price < cost price the result is a loss
Simple interest: I = P x r x t, where P = principal, r = rate (as a decimal), t = time in years
A budget balances income and expenses; savings = income - expenses
Percentage profit/loss = (profit or loss / cost price) x 100
Key Vocabulary
Profit
The amount gained when selling price exceeds cost price
Loss
When cost price exceeds selling price; a negative profit
Simple interest
Interest calculated only on the original principal amount
Budget
A plan that outlines expected income and expenses over a period
Knowledge Check
Select the correct answer for each question. Click "Check Answer" to see if you are right.
Question 1
A trader buys an item for $50 and sells it for $65. What is the profit?
Question 2
Calculate simple interest on $400 at 5% per year for 3 years.
Question 3
A student earns $120 per week and spends $95. How much do they save per week?
Key Concepts Summary
- ●Profit = selling price - cost price; if selling price < cost price the result is a loss
- ●Simple interest: I = P x r x t, where P = principal, r = rate (as a decimal), t = time in years
- ●A budget balances income and expenses; savings = income - expenses
- ●Percentage profit/loss = (profit or loss / cost price) x 100