Fin math they call it, it is so important to everyday life soo much that Sharp, HP and others made a financial calculator for quick calculations. It is very fortunate or unfortunate that this calculator is not allowed in your exam, and you don’t need it unless you wish to pursue a career in Bcom. The formulas provided for a matriculant are very handy and I personally find them to be quick also, just a bit slow but very quick 😊

The most obvious and very common trap is set on the use of words, you need to be at the top of your game when it comes to understanding the scenario; I recommend my learners to try their best to understand every single line item and its impact on the formula. When you read the question, you must figure out what variable of the formula does this line item affect. Or, you could read the whole scenario and then come back to go through it line by line.

The second most important thing is to know your formulas very well and where to use them. We will now discuss all the applicable formulas with the aid of your study guide.

Simple interest and simple decay:

A equals P into 1 plus or minus i.n

• A being the future value, P is the present value, I is the interest rate, and n is the term
• The plus sign is for growth and the negative one is for decay (decrease in vcalue)

Compound interest and decay:

A equals P into 1 plus or minus I index n

• All the variable represent the same with simple interest. The major difference is compounding periods
• Devide I by the compounding periods and multiply n by the compounding periods

Nominal interest and effective interest:

Now this is at the top rank of traps, if your interest compound period does not match the installment periods, you need to adjust so to match them. Say you earn interest monthly but you make quarterly installments into a fund, to be able to find the future value of this fund you need to match the interest compounded monthly to an interest compounded quarterly.

Refer to your study guide for the nominal and effective interest rate formula. On the left handside you will have 1 plus I.new devided by the new compounding period all indexed to the new compounding period, and on you right hand side you will have 1 plus given interest divided by given compounding period all indexed to that compounding period. From here you solve for the unknown i.new and there you have it.

Additional deposits, withdrawals and changes on interest rate:

• Additional deposits and withdrawals:

Simply add a new separate formula for the deposit to the original investment, for withdrawals you subtract. Using the corresponding interest rate.

• Changes on interest rate:

Add a second interest bracket (know as the factor) and multiply it with the original factor bracket

• You will need to device a timeline in order to have corresponding term and interest rate

Upto this far, most of this content is grade 11 and you should master it very well, on the next post we will detail future value and present value. See you there

This blog post is not the first step towards learning the concepts of math but the coupling step to ease the use of your study guide and other study material. Read it over and over again to keep the concepts at the back of your head. Math is a subject of rules; know the rules, be able to duplicate them on a blank paper and go fetch your distinction