Chapter 2 Interest and Depreciation

Number and Algebra
Interest and
depreciation
The value of an investment increases over time as a result of
interest being added to it, whether it be simple or
compound interest. On the other side of the coin, the value
of assets and items such as cars and office equipment
decreases over time due to age and wear-and-tear.
Compound interest and depreciation use formulas that
involve repeated percentage increase and decrease
respectively.
N E W C E N T U R Y M AT H S A D V A N C E D
ustralian Curriculum
10 10A
Shutterstock.com/ollirg
for the A
n Chapter outline
2-01 Earning an income
2-02 Income tax
2-03 Simple interest
2-04 Compound interest
2-05 The compound
interest formula
2-06 Term payments
2-07 Depreciation
n Wordbank
Proficiency strands
U
F
PS
C
U
F
C
U
F
PS
C
U
F
PS
C
allowable deduction A part of a persons yearly income

that is not taxed, such as work-related expenses and
donations to charities
U
U
U
depreciation The decrease in the value of items over time

due to ageing
F
F
F
PS
PS
PS
R
R
C
C
C
compound interest Interest calculated on the principal

invested as well as on any accumulated interest
instalment or repayment The amount of money paid at

regular time periods (weekly, fortnightly, monthly) to pay
off a loan
net pay Pay received after deductions from gross pay;
take-home pay
per annum (p.a.) Per year
principal The original amount of money invested or
borrowed, for the purpose of earning interest
simple interest Interest calculated on the original principal
invested only
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Interest and depreciation
n In this chapter you will:

solve problems involving simple interest
connect the compound interest formula to repeated applications of simple interest using
appropriate digital technologies
calculate weekly, fortnightly, monthly and yearly incomes
calculate wages, salaries, overtime, commission, piecework and annual leave loading
use tables to calculate income tax and PAYG tax
calculate compound interest for two to three years by repeated percentage increase
calculate compound interest using the compound interest formula A P(1 R) n
solve problems involving term payments
calculate depreciation using the compound interest formula
SkillCheck
Worksheet
StartUp assignment 1
a 4%
e 9 12%
MAT10NAWK10001
Worksheet
Percentage shortcuts
3
Skillsheet
MAT10NASS10001
Percentage
calculations
b 2.5% of $4650
c 12% of $37 450
b $3955 by 2%
c $8600 by 1.6%
b 2 years?
b One year _________ fortnights

d 48 months _________ years
f 100 months _________ years _________ months
If P mvt, find:
a P when m 1600, v 0.072, t 10
b m when P 120, v 0.3, t 8
c v when P 18, m 60, t 5
Evaluate, correct to the nearest cent:

a $5000 3 (1.045) 4
c $15 300 3 (1.065) 3
24
c 5 years?
Copy and complete:

a One year _________ weeks
c One year _________ days
e 84 days _________ weeks
MAT10NASS10002
d 4.7%
h 20%
How many months are there in:

a 3 years?
Skillsheet
c 18.3%
g 15 14%
Increase:
a $7000 by 5%
b 22%
f 6.75%
Find:
a 6% of $1200
MAT10NAWK10002
Mental percentages
Convert each percentage to a decimal.
b $28 000 3 (1.03) 6

d $32 400 3 (1.072) 10
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10 10A
2-01 Earning an income
NSW
Wages, salaries and overtime
Alamy/Keith Morris
A wage is calculated from the number of

hours worked and is usually paid weekly.
Wage earners can make more income by
working extra hours (overtime).
A salary is a fixed annual amount, paid
weekly, fortnightly or monthly. Salary earners
do not earn overtime pay but can receive
benefits such as a computer, company car,
expense account, shares in the company or
paid medical expenses.
Summary
1 year 12 months
1 fortnight 2 weeks
1 year 52 weeks for wage earners
1 year 52.18 weeks for salary earners
The two most common rates of overtime pay are:
time-and-a-half 1.5 3 normal hourly rate

double time 2 3 normal hourly rate
Example
Thomas earns a salary of $70 400 p.a.

How much does he earn:
a each week?
p.a. per annum per year
b each fortnight?
c each month?
Solution
a Weekly income $70 400 4 52:18
$1349:1759 . . .
$1349:18
Rounded to the nearest cent.
b Fortnightly income 2 3 $1349:18

$2698:36
1 fortnight 2 weeks
c Monthly income $70 400 4 12

$5866:6666 . . .
$5866:67
1 year 12 months
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Example
Noor earns $22.65 per hour at normal rates. Last week, she worked 38 hours at normal rates,
6 hours at time-and-a-half and 3 hours at double time. Calculate Noors total earnings for the
week.
Solution
Normal pay $22:65 3 38
$860:70
Time-and-a-half pay 6 3 $22:65 3 1:5
6 hours
$203:85
Double time pay 3 3 $22:65 3 2
3 hours
$135:90
Total earnings $860:70 $203:85 $135:90
$1200:45
Commission, piecework and annual leave loading
Example
Shutterstock.com/Radu Razvan
Commission is earned by salespeople and agents,

and is a percentage of the total value of items sold.
Piecework is earned according to the number
of items made or tasks completed.
Annual leave loading or holiday loading is
extra pay given during annual leave (holidays),
and is 17.5% of four weeks normal pay.
Georgia is a real estate agent and is paid a commission

of 2.5% on the value of the apartments she sells. She
also receives a weekly retainer of $750. How much will
Georgia earn if she sells an apartment for $152 500?
A retainer is a fixed amount

paid regardless of how many
items are sold.
Solution
Commission 2:5% of $152 500
$3812:50
Total earnings commission retainer

$3812:50 $750
$4562:50
[ Georgia earns $4562.50.
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Example
10 10A
Emad is a jewellery designer. He makes handmade jewellery and is paid at the following rates.
$278 per necklace
$62 per pair of earrings
$95 per bracelet
This month, Emad made 23 necklaces, 7 pairs of earrings and 19 bracelets. How much did he earn?
Solution
Monthly earnings 23 3 $278 7 3 $62 19 3 $95
$8633
Example
Sanjays annual salary is $70 590. For his Christmas holidays, he received 4 weeks normal pay
plus 17.5% annual leave loading for the 4 weeks. Calculate Sanjays:
a normal weekly pay
b annual leave loading
c total pay for the Christmas holiday.
Solution
a Weekly pay $70 590 4 52:18
$1352:8171 . . .
b Annual leave loading 17:5% 3 $1352:82 3 4

$946:974
$946:97
$1352:82
c Total holiday pay 4 3 $1352:82 $946:97
$6358:25
Exercise 2-01
Earning an income
Express all answers correct to the nearest cent where necessary.

1 Find the weekly wage for each person.
a Mary earns $21.85 per hour and works for 40 hours.
b Connor works 8 hours a day, Monday to Friday, and is paid $23.47 per hour.
c Yoshe works on Monday and Tuesday from 8:30 a.m. until 4:00 p.m. and Thursday from
midday until 9:00 p.m., and earns $15.30 per hour.
2 Greta earns $19.56 an hour and works for 31 hours each week. Chandler earns $21.44 per
hour for his 27 hours of work. Who earns more per week and by how much?
3 Maggie earns a salary of $180 640 p.a. How much does she earn:
a each week?
b each fortnight?
See Example 1
c each month?
4 Rakitu considers two jobs, one locally with an annual salary of $57 640 p.a. and the other one
in the city with a fortnightly pay of $2320. Calculate the weekly income for each job,
determine which one pays more per week, and by how much.
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
See Example 2
5 Anan works 38 hours at normal rates, 7 hours at time-and-a-half and 4 hours at double-time.
Calculate Anans total earnings if he earns $19.40 per hour at normal rates.
6 Jacqui works 8.5 hours per day from Tuesday to Friday. She is paid $18.78 per hour. She also works on
Saturday for 4.5 hours at a special rate of $21.49 per hour. How much did Jacqui earn for the week?
7 Idra works the following hours in a week at the clothing chain Shop til U Drop.
Day
Monday
Tuesday
Thursday
Friday
Saturday
Hours worked
9:00 a.m. 5:00 p.m.
9:00 a.m. 4:00 p.m.
11:00 a.m. 7:30 p.m.
10:00 a.m. 5:00 p.m.
10:30 a.m. 5:00 p.m.
She is paid at the following rates.

Day
Monday to Friday
Saturday
Thursday after 4:00 p.m.
Rate of pay
$19.62 per hour
$23.15 per hour
What is Idras total income for the week?

See Example 3
See Example 4
8 Fatimah is paid a commission of 2.5% on the value of the goods she sells. She also receives a
weekly retainer of $875. How much will Fatimah earn if she sells goods to the value of $41 600
in one week? Select the correct answer A, B, C or D.
A $1915
B $1061.88
C $2187.50
D $1018.13
9 Nathan is a real estate agent whose commission is calculated on the value of the properties he sells:
3% paid on first $300 000
1.5% paid on next $250 000
0.75% paid on any value thereafter
How much commission did Nathan earn for selling a house for $625 000?
10 Brandon designed an app, iCalc, that is selling for $2.49. If he makes 70% profit on the sale
price of each app sold, how much would he make from selling 800 units of this app?
11 Matt charges $60 for each lawn he mows and $45 for trimming hedges in each yard. In a
week, he mows 24 lawns and trims 15 hedges. How much does he earn for the week?
12 Clean 2 Swim charges $86 to clean backyard pools. If this business earned $4644 in the first
week of summer, how many pools were cleaned?
13 Jade makes homemade eco-friendly soaps, shampoos and cleaning products. A customer
purchases 3 homemade soaps, 2 bottles of shampoo and 3 of the cleaning sprays. How much
does Jade receive for these purchases?
75ml
28
SHAMPOO
SHAMPOO
O
Homemade soaps
$5.60
Eco-friendly shampoo
$12.70
Natural cleaning spray
$7.25
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14 Calculate the annual leave loading for each person if it is 17.5% of 4 weeks pay.
a Peter earns $610 per week
c Samir earns $5944 per month
b Jamilla earns $2000 per fortnight

d Ellie earns $46 630 p.a.
15 For his annual holidays, Jake received 4 weeks normal pay plus 17.5% annual leave loading
for the 4 weeks. If Jakes annual salary is $50 725, find his:
a normal weekly pay
b annual leave loading
c total pay for the four-week holiday.
See Example 5
The Australian Government sets the

minimum standards for pay and
conditions for all Australian workers.
Different industries can have different
needs from employees in terms of:
normal and overtime hours worked,
breaks allowed
allowances
dress codes, such as uniforms
working conditions
Shutterstock.com/CoolKengzz
Investigation: Workers entitlements
1 Visit the Fair Work Ombudsman website www.fairwork.gov.au and select Industries.
2 Select two industries and identify any similarities and differences in the requirements of
those industries.
3 Write a summary of your findings.
4 Give a report in class.
2-02 Income tax
NSW
Not all of a persons income is taxed. If we use some of our income for work-related expenses or
donate money to charities, these amounts are called allowable deductions (or tax deductions) and
are not taxed. Examples of allowable deductions are tools of trade, uniforms, car-related expenses,
subscriptions to professional organisations and journals.
Summary
Income tax is calculated on a persons taxable income, which is the gross income (total
earnings) less all allowable deductions, rounded down to the nearest dollar.
Taxable income gross income allowable deductions
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
The more a person earns, the higher the rate of tax to be paid. The table below shows how income
tax is calculated.
Tax rates for Australian residents
Taxable income
0 $18 200
$18 201 $37 000
$37 001 $80 000
$80 001 $180 000
$180 001 and over
Tax on this income

Nil
19c for each $1 over $18 200
$3572 plus 32.5c for each $1 over $37 000
$17 547 plus 37c for each $1 over $80 000
$54 547 plus 45c for each $1 over $180 000
Source: Australian Taxation Office for the Commonwealth of Australia
Example
Sophia earned $62 348 last financial year and collected bank interest of $440.81. She had
allowable deductions of $427.52 in work expenses and $110 in donations to charities.
a Calculate her taxable income.
b Use the tax table to calculate the income tax that Sophie must pay.
Solution
a Taxable income $62 348 $440:81 $427:52 $110
$62 251:29
$62 251
Rounded down to the nearest dollar.
b According to the table, a taxable income of $62 251 is in the

$37 001 $80 000 tax bracket.
Income tax $3572 0:325 3 $62 251 $37 000
32.5c for each $1 means
$11 778:575
32.5% or 0.325
$11 778:58
PAYG tax and net pay

Income tax deducted from your pay by your employer every payday is called PAYG (Pay As You
Go) tax. The total amount of PAYG tax paid over the year is usually more than the actual income
tax payable, so at the end of the financial year you will receive the difference as a tax refund.
Gross pay is the total amount a person earns or receives, but most workers have a variety of
deductions taken from their pay before they receive it, including PAYG tax, superannuation
contributions, union fees and health fund payments. The amount of income left after the
deductions is called net pay.
Summary
Net pay gross pay tax other deductions
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Example
10 10A
Jay earns a gross pay of $2290.33 per fortnight. His deductions are for PAYG tax, $44.10 for
private health insurance and $55.82 for superannuation.
a Use this PAYG tax table to find
Jays PAYG tax per fortnight.
b Calculate Jays net pay.
c Calculate Jays total deductions
as a percentage of his gross
income (correct to one decimal
place).
Fortnightly earnings
($)
22742279
22802285
22862291
22922297
22982303
23042309
PAYG tax withheld

($)
450
452
454
456
458
460
Solution
a In the table, $2290.33 falls in the $2286 $2291 range.
Fortnightly PAYG tax $454
b Net pay $2290:33 $454 $44:10 $55:82
$2290:33 $553:92
Net pay gross pay total

deductions
$1736:41
c Total deductions $553.92
$553:92
3 100%
Deductions percentage
$2290:33
24:1851 . . . %
Total deductions 3 100

Gross pay
24:2%
Exercise 2-02
Income tax
1 Mrs Shepherd earns $47 628 in a year and has allowable deductions of $1930.46.
a Calculate her taxable income, rounded down to the nearest dollar.
See Example 6
b Use the tax table on the previous page to calculate the income tax that Mrs Shepherd must pay.
2 Adam is an environmental engineer who had a gross income of $118 742 this year and workrelated expenses totalling $4022.80, which are tax-deductible. Calculate:
a Adams taxable income, rounded down to the nearest dollar
b Adams payable income tax.
3 Erin is a graphic designer who earns an annual salary of $90 541 and has collected $1029.45 in
bank interest. She has allowable deductions of $379 for tools related to her work and $287 in
donations to charity. Calculate:
a Erins taxable income
b the amount of tax payable.
4 Riley the builder had a gross income of $56 922 this year. He is entitled to these tax
deductions: tools $1538, training courses $445 and outdoor protective clothing $506. How
much should Riley pay in tax? Select the correct answer A, B, C or D.
A $13 046.65
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B $10 855.58
C $9237.73
D $6884.27
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
5 Michaela is a nurse earning $87 996 per year. Her allowable deductions are the cost of nonslip footwear $225, the cost of laundering uniforms $1046, and union fees $297.60. How
much should Michaela pay in tax?
6 William owns a photography business and earned $196 000 last year. His allowable deductions
were Internet costs for his website $968, photographic equipment $23 672, and travel to
photo locations $15 930. Calculate the amount that William should pay in tax.
7 Jackson earns a gross weekly income of $1075.26. His weekly deductions are $309.11 PAYG
tax, $44.55 for private health insurance and $25.18 for superannuation. Calculate Jacksons net
weekly pay.
See Example 7
8 Isha earns a gross income of $788.20 per week. Her deductions are $132.44 tax and $32.24 for
private health insurance. Calculate Ishas net income.
Use the PAYG table from Example 7 on the previous page to answer questions 9 to 12.
9 Every fortnight, Mr Singh earns $2280 and pays $22.80 in union fees and $94.10 in
superannuation.
a Find how much PAYG tax he pays per fortnight.
b Calculate Mr Singhs fortnightly net pay.
c What percentage (correct to one decimal place) of his gross pay do the deductions make up?
10 Holly earns a gross pay of $2300 per fortnight. Her deductions are PAYG tax, $64.35 for
superannuation and $30 for life insurance. Find Hollys:
a PAYG tax
b net pay
c total deductions as a percentage of her gross income (correct to one decimal place).
11 Stefan earns $1148 per week.
a If he is paid fortnightly, what is his fortnightly gross pay?
b Find the PAYG tax that is taken out of his gross pay.
c Stefans deductions are $141.94 for his health fund and $51.33 for superannuation.
Calculate Stefans net pay.
12 Anne earns a salary of $59 944 p.a. Each fortnight she has deductions of $256.20 for family
health insurance and $35 for superannuation taken from her gross income.
a Calculate Annes fortnightly gross income.
b How much PAYG tax does she pay per fortnight?
c Calculate Annes fortnightly net income.
13 Copy and complete this pay slip.
Employee: Ziad Chaker
Hours worked
Normal
Time-and-a-half
Double time
32
Hourly pay rate: $19.45

39
2
0
Deductions
Tax: $200.72
Gross weekly income
Total deductions
Net weekly income
Other: $168.38
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10 10A
Technology Online income tax calculators

The Australian Taxation Office (ATO) website www.ato.gov.au has online calculators for income
tax and PAYG tax. Visit the website and search Simple Tax Calculator to find the income tax
calculator for individuals.
1 Enter the taxable income $63 000 as 63000 (no spaces).
2 Select the current financial year.
3 Select Resident for full year and click Next.
4 The estimated tax payable will be shown on a new screen.
5 Repeat for at least two more taxable incomes.
6 Find the PAYG tax calculator and use it to find the PAYG tax payable and net pay for
each of the following gross pays.
a $1408 weekly
b $2870 fortnightly
c $5610 monthly
Worksheet
2-03 Simple interest
Simple interest
MAT10NAWK10003
When you invest money, you receive interest from your investment.
When you borrow money, you pay interest on your loan.
The original amount of money invested or borrowed is called the principal.
This interest rate is a percentage of the principal, usually written as a rate per annum
(per year), abbreviated p.a.
Simple interest (or flat rate interest) is interest calculated simply on the original principal.
Simple interest is calculated using the following formula.
Worksheet
Simple interest table
MAT10NAWK00023
Puzzle sheet
Simple interest
MAT10NAPS00027
Summary
I PRN, where:
I is the simple interest,
P is the principal,
R is the interest rate per time period, expressed as a fraction or decimal, and
N is the number of time periods
Example
Find the simple interest on:

a $4000 at 3.5% p.a. for 6 years
c $75 640 at 18.3% p.a. for 210 days.
b $13 500 at 5.5% p.a. for 7 months
Solution
a P $4000, R 3.5% 0.035, N 6 years
I PRN
$4000 3 0:035 3 6
$840
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
b P $13 500, R 5.5% 0.055, N 7 years

12
I PRN
7
$13 500 3 0:055 3
12
$433:125
$433:13
c P $75 640, R 18.3% 0.183, N 210 years
365
I PRN
210
$75 640 3 0:183 3
365
$7963:9594 . . .
$7963:96
Example
Rounded up to the nearest cent.
Rounded up to the nearest cent.
Petra invests $17 400 for 2 years at 3.75% p.a. flat rate interest. To what final value will her
investment grow?
Solution
P $17 400, R 3.75% 0.0375, N 2 years
I PRN
$17 400 3 0:0375 3 2
$1305
Value of investment $17 400 $1305
$18 705
Example
Principal interest
10
After 4 years, an investment of $13 000 has earned $2808 in simple interest. What is the
annual interest rate?
Solution
I $2808, P $13 000, N 4 years
I PRN
$2808 $13 000 3 R 3 4
$2808 $52 000R
$2808
R
$52 000
0:054
5:4%
[ Annual interest rate 5.4%
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Example
10 10A
11
For how many months will $10 000 need to be invested to earn $250 in simple interest at
3.25% p.a.?
Solution
I $250, P $10 000, R 3.25% 0.0325
I PRN
$250 $10 000 3 0:0325 3 N
$250 $325N
$250
N
$325
0:7692 . . . years
0:7692 . . . 3 12 months
9:230 . . . months
Rounded up to the nearest month.
10 months
Exercise 2-03
Simple interest
In this exercise, give all money answers correct to the nearest cent.
1 Calculate the simple interest earned on each investment.
a $35 000 for 4 years at 3.6% p.a.
b $26 850 at 5.5% p.a for 2 years
c $8200 invested for 5 months at 3% p.a.
d $6590 invested for 17 weeks at 4.5% p.a.
e $5250 invested for 250 days at 2% p.a.
f $18 400 invested for 153 days at 5.85% p.a.
See Example 8
2 Calculate the flat-rate interest charged on each loan.

a $1250 for 2 years at 3.5% p.a.
c $1.15 million at 8.5% p.a. for 4 years.
e $9750 for 16 weeks at 9.3% p.a.
b $18 900 for 5 12 years at 5.7% p.a.

d $12 000 for 10 months at 8.2% p.a.
f $24 720 for 136 days at 7.85% p.a.
3 Harry owed $783.26 on his credit card. The credit card company charged him one months simple
interest at 18% p.a. How much interest was he charged? Select the correct answer A, B, C or D.
A $11.75
B $14.10
C $27.39
D $43.51
4 Find the final value of each investment using simple interest.
a $10 000 invested for 3 years at 4% p.a.
b $1500 invested for 2 years at 2.3% p.a.
c $8500 invested for 3.5 years at 3% p.a.
d $9250 invested for 6 years at 3.75% p.a.
See Example 9
5 Liong borrowed $6000 to go on an overseas holiday, at 12% p.a. flat-rate interest for 2 years.
Calculate:
a the total interest
b the total amount Liong must repay.
6 The interest on a loan of $2500 over 4 years is $450. Calculate the flat rate of interest p.a.
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See Example 10
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
7 Katy took out a loan for $12 000 over 3 years. If her total loan repayments amounted to
$18 750, calculate:
a the interest charged
b the flat rate of interest (p.a.)
8 After 5 years, the interest on a loan of $8000 amounts to $3900. Calculate the annual simple
interest rate.
See Example 11
9 For how many years will $4200 need to be invested to earn $200 interest, if the interest rate is
2.5% p.a.?
10 How many weeks will it take for $50 000 to earn $1500 in interest if the rate is 6% p.a.?
11 How many days will it take for $20 000 to earn $300 in interest if the rate is 4% p.a.?
A $32.40
C $3573.96
Shutterstock.com/Fesus Robert
12 To save for a holiday, Dariya invested $3480 for

6 months at a simple interest rate of 5.4% p.a.
How much will this investment be worth by the
end of the period? Select the correct answer
A, B, C or D.
B $93.96
D $3866.67
13 For how long will $20 000 need to be invested to amount to $22 000, if interest is paid at the
rate of 4% p.a.? (Give your answer in years.)
14 What is the flat rate of interest (as a percentage, correct to one decimal place) when $1650
earns $85 in interest over 2 years?
15 Toula used a credit card to buy a netbook computer for $799 and some extra accessories for
$246. She pays off this debt in 30 days. The credit card charges 22% p.a. simple interest daily.
a Calculate the simple interest charged.
b How much will Toula pay after 30 days?
2-04 Compound interest

Most investments earn compound interest rather than simple interest. With compound interest,
the interest earned after one time period is added to the principal so that next time, the interest is
calculated on a larger principal. This means that more interest can be earned, because we are also
earning interest on the interest we have already earned as well as on the original principal. The
word compound means combined.
Example
12
A principal of $23 000 is invested at 4% p.a. interest, compounded yearly for 2 years.
a What is the total value of the investment after 2 years?
b What is the amount of compound interest earned?
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10 10A
Solution
a The interest for each year is calculated separately.
After the first year:
I $23 000 3 0:04 $920
Investment $23 000 $920
Principal interest
$23 920
After the second year:
I $23 920 3 0:04 $956:80
Investment $23 920 $956:80
$24 876:80
New principal interest
b Compound interest earned final investment principal

$24 876:80 $23 000
$1876:80
Compound interest involves repeated percentage

increase
In Example 12, to calculate compound interest on a principal of $23 000 over two years at 4%
p.a., we are actually increasing $23 000 by 4% twice. Adding 4% to the principal is the same as
increasing the principal by 4%, which is the same as multiplying the principal by 104% or 1.04.
Investment after first year $23 000 3 1.04 $23 920
Investment after second year $23 920 3 1.04 $24 876.80
We can even combine these two steps into one step by repeated percentage increases on the
original principal of $23 000:
Investment after second year $23 000 3 1.04 3 1.04 $24 876.80
Using repeated percentage increases can simplify our compound interest calculations.
Example
13
A principal of $9000 is invested at 3.7% p.a. compounded yearly over 3 years. What is:
a the value of the investment after 3 years?
b the compound interest earned?
Solution
a Adding 3.7% interest to the principal is the same as multiplying the principal by 1.037.
) Investment after 3 years $9000 3 1:037 3 1:037 3 1:037
$9000 3 1:0373
$10 036:4188 . . .
$10 036:42
b Compound interest earned final investment original principal

$10 036:42 $9000
$1036:42
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Exercise 2-04
See Example 12
Compound interest
1 A principal of $23 000 is invested at 5% p.a. interest, compounded yearly over 2 years.
a Copy and complete the following working to calculate the value of the investment after 2
years.
After the first year:
I $23 000 3 0:05 $
Investment $23 000 $

$
After the second year:

I $
3 0:05 $
Investment $
$
b Copy and complete the following working to calculate the compound interest earned.
Compound interest earned final investment principal
$
$23 000
$
2 Finn invests $15 000 at 2.5% p.a. compounded yearly over 3 years. Show all working
(as in question 1) to find:
a the value of the investment after 3 years
b the total amount of compound interest earned.
3 Selina invests $34 100 at 6.2% p.a. interest compounded yearly over 2 years. Calculate:
a the final value of the investment
See Example 13
b the compound interest earned.
4 Use repeated percentage increases to calculate the final value of each investment compounded
annually, then calculate the compound interest earned.
a $5000 for 2 years at 4% p.a.
b $27 800 for 3 years at 2.85% p.a.
c $9600 for 3 years at 5% p.a.
d $39 500 for 2 years at 3% p.a.
e $18 400 for 4 years at 1.25% p.a.
5 For each investment, calculate the compound interest earned.
a $30 400 at 5% p.a. interest for 3 years.
c $8750 at 1.75% p.a. interest for 2 years.
e $18 960 at 6.35% p.a. interest for 5 years.
Mental skills 2
b $19 150 at 4.2% p.a. interest for 2 years.

d $36 000 at 3.5% p.a. interest for 3 years.
Maths without calculators
Finding 15%, 212%, 25% and 1212%

To find 10% or 1 of a number, divide by 10
10
To find 5% of a number, find 10% first, then halve it (since 5% is half of 10%)
So to find 15% of a number, find 10% and 5% of the number separately, then add the
answers together.
38
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for the A
10 10A
Study each example.

a
b
c
d
15% 3 80 (10% 3 80) (5% 3 80) 8 4 12

15% 3 $170 (10% 3 $170) (5% 3 $170) $17 $8.50 $25.50
15% 3 3600 (10% 3 3600) (5% 3 3600) 360 180 540
15% 3 $28 (10% 3 $28) (5% 3 $28) $2.80 $1.40 $4.20
Now find 15% of each amount.

a 120
g $180
b $840
h 400
c 260
i $1600
d $202
j $22
e $50
k 6000
f 72
l $350
To find 212% of a number, first find 5%, then halve it.

3
Study each example.

a 2 12 % 3 600
b 2 12 % 3 $820
10% 3 600 60
10% 3 $820 $82
5% 3 600 12 3 60 30
2 12 % 3 600 12 3 30 15
5% 3 $820 12 3 82 $41
2 12 % 3 $820 12 3 $41 $20:50
Now find 2 12 % of each amount.

a 400
e 1500
b 6640
f $232
c $2000
g 5400
d $880
h $904
To find 25% of a number, halve the number twice as 25% 14.

5
Study each example.

a 25% 3 700
50% 3 700 12 3 700 350
25% 3 700 12 3 350 175
25% 3 $86
50% 3 $86 12 3 $86 $43
) 25% 3 $86 12 3 $43 $21:50

a 2000
g 66
b $80
h 298
c 18
i $780
d $25
j $1700
e $324
k $126
f $140
l 1160
To find 1212% of a number, find 25% first, then halve it. In other words, halve three times
because 1212% 18.
7
Study each example.

a 12 12 % 3 400
50% 3 400 12 3 400 200
25% 3 400 12 3 200 100
12 12 % 3 400 12 % 3 100 50
b 12 12 % 3 $144
50% 3 $144 12 3 $144 $72
25% 3 $144 12 3 $72 $36
12 12 % 3 $144 12 % 3 $36 $18

a 1280
e $540
9780170194662
b $12
f $250
c 60
g 304
d $260
h 1360
39
Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Worksheet
2-05 The compound interest formula
Compound interest
MAT10NAWK10004
Technology worksheet
Excel worksheet:
Comparing interest
rates
MAT10NACT00014
There is a formula for calculating the final amount of an investment earning compound interest.
Note the following pattern.
Final amount of $23 000 at 4% p.a. interest for 2 years $23 000 3 (1.04) 2
Final amount of $9000 at 3.7% p.a. interest for 3 years $9000 3 (1.037) 3
Final amount of $18 960 at 6.35% p.a. interest for 5 years $18 960 3 (1.0635) 5
Excel spreadsheet:
Interesting facts
Summary
MAT10NACT00044
Compound interest
A P(1 R) n, where:
Excel worksheet:
Simple and compound
interest calculator
MAT10NACT00015
A is the total (final) amount of the investment

P is the principal
R is the interest rate per compounding period, expressed as a decimal
n is the number of compounding periods
The compound interest is then calculated using this formula:
Excel spreadsheet:
Simple and compound
interest
Compound interest total amount principal

I AP
MAT10NACT00045
Puzzle sheet
Compound interest
with annual rests
MAT10NAPS00028
Puzzle sheet
Compound interest
with non-annual rests
MAT10NAPS00029
Example
14
For each of the following investments, calculate:

i the total amount of the investment
ii the compound interest earned.
a $26 750 is invested at 4% p.a. for 3 years with interest compounded annually.
b $52 000 is invested at 3.8% p.a. for 5 years with interest compounded annually.
Solution
a i P $26 750, R 4% 0.04, n 3
A P1 Rn
$26 7501 0:043
$26 7501:043
$30 090:112 . . .
$30 090:11
The total amount of the investment is $30 090.11.
ii Compound interest $30 090:11 $26 750
$3340:11
40
IAP
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10 10A
b i P $52 000, R 3.8% 0.038, n 5

A P1 Rn
$52 0001 0:0385
$52 0001:0385
$62 659:9597 . . .
$62 659:96
ii Compound interest $62 659:96 $52 000
$10 659:96
Example
Video tutorial
15
Compound interest
Calculate the compound interest when $24 500 is invested at 6.3% p.a. for 5 years
a compounded annually
MAT10NAVT10021
b compounded monthly.
Solution
a P $24 500, R 0.063, n 5
A $24 500 1 0:0635
$24 500 1:0635
$33 253:1205 . . .
$33 253:12
I $33 253:12 $24 500
$8753:12
b Because interest is compounded monthly, R and n must be expressed in months, not
years.
0:063
P $24500, R
0:00525 per month, n 5 3 12 60 months
12
A $24 5001 0:005 2560
$24 5001:005 255
$33 543:701 98 . . .
$33 543:70
I $33 543:70 $24 500
$9043:70
Note: More interest is earned when it is compounded monthly rather than yearly. Why do
you think this is so?
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Exercise 2-05
See Example 14
The compound interest formula
1 An amount of $13 000 is invested at 5% p.a. interest, compounded over 2 years. What is the
total value of the investment?
2 For each of the following investments where interest is compounded yearly, calculate:
i the total amount of the investment
a $6500 invested at 7% p.a. for 6 years
c $12 240 invested at 1.6% p.a. for 2 years
e $8000 invested at 1.75% p.a. for 3 years
ii the compound interest earned.

b $10 000 invested at 8.5% p.a. for 4 years
d $34 600 invested at 4.9% p.a. for 5 years
3 Calculate the amount of interest earned on an investment of $6500 if it is invested at 2.5% p.a.
compounded annually for 8 years. Select the correct answer A, B, C or D.
A $131.14
B $832.81
C $1300
D $1419.62
4 Find the amount of interest earned on one million dollars invested at 14.9% p.a. for 6 years.
5 Find the amount of interest charged on a loan of $25 000 if it is borrowed over 10 years at 8%
p.a. compounded annually. Select the correct answer A, B, C or D.
A $31 250
See Example 15
B $28 973.12
C $28 589.72
D $20 000
6 For each investment, calculate:
i the total amount

a $10 000 for 5 years at 6% p.a., compounded monthly
b $35 500 for 10 years at 4% p.a., compounded twice a year
ii the interest earned.
c $8900 for 2 years at 3% p.a., compounded quarterly

d $42 000 for 5 years at 4.8% p.a., compounded monthly
Quarterly means 4 times per

year or every three months.
e $16 500 for 3 years at 5.6% p.a., compounded every 6 months

f $4900 for 1 year at 5.5% p.a., compounded daily
7 Find the total value of an investment of $4300 over 5 years at 4.6% p.a. interest, compounded
every 6 months. Select the correct answer A, B, C or D.
A $4817.78
B $5384.27
C $5397.90
D $8506.24
8 a Reese invested $6000 for 2 years at a flat rate of 5% p.a. Calculate the interest earned.
b Tegan invested $6000 for 2 years at an interest rate of 5% p.a. compounded annually.
Calculate the amount of interest earned.
c Whose investment earned more interest? How much more?
9 Lisa is setting up a trust account for her new grandson Stefan. In 18 years time, she wants the
investment to be worth $30 000, to help with the cost of university fees or the purchase of a
car. Suppose the interest rate for the account is 6% p.a. compounding yearly.
a How much should Lisa invest now to achieve the $30 000 target?
b If Lisa opened a trust account that earns 7% p.a. compounding monthly instead, how
much less would she need to invest?
10 Zoe is 5 years old and about to start school. Her parents want to invest $15 000, for her high
school education expenses, in an account that earns 6% p.a. over 7 years.
a Calculate the total interest earned if interest is compounded:
i yearly
ii every six months
iii quarterly
iv monthly
b Which compounding period should Zoes parents choose? Why?
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10 10A
Technology Comparing simple with compound

interest
Skillsheet
Spreadsheets
MAT10NASS10003
Technology
In this activity you will compare the interest earned on an investment of $1000 for 10 years at 8%
p.a. simple interest and 8% p.a. compound interest, compounded annually.
1 Create this spreadsheet. The principal (P) is entered in cell A1 and the annual interest rates
(in decimal form) in cells B1 and B2.
GeoGebra: Compound
and simple interest
investments
MAT10NATC00009
2 To calculate the simple interest in column B, in cell B4 enter the formula $A$1*$B$1*A4.
Now Fill Down from cell B4 to B13.
3 To calculate the compound interest in column C, in cell C4 enter the formula
$A$1*(1$C$1)^A4-$A$1. Now Fill Down from cell C4 to C13.
4 Highlight cells A3 to C13. Insert Scatter with Smooth lines and markers.
5 When the interest rate is the same, which account pays better interest simple or
compound interest? (Type your answer in cell A15)
6 Now compare the interest earned on an investment of $1000 for 10 years at 9% p.a. simple
interest and 7% p.a. compound interest, compounded annually. Change the interest rates in
cells B1 (0.09) and B2 (0.07) respectively.
Answer the following questions in the spreadsheet cells indicated in brackets.
7 After how many years did the compound interest rate pay more than the simple interest
rate? (A16)
8 How much extra interest did the compound interest rate pay at the end of the 10 years? (A17)
9 Change the interest rate in B1 to 10% (0.1) and B2 to 9% (0.09). How does the change in
interest rate affect the amount of interest paid? Include calculations to justify your answer. (A18)
10 Change the interest rate in B1 to 12% (0.12) and B2 to 8.5% (0.085). After how many years did
the amount of compound interest earned overtake the amount of simple interest earned? (A19)
11 What is the difference in the amount of compound interest earned for the 10-year period
compared to the simple interest investment? Is it a significant amount? Justify your answer. (A20)
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
NSW
Worksheet
Term payments:
Spreadsheet
MAT10NAWK10005
2-06 Term payments

Many customers buy expensive household items on terms, which means paying off the item by
regular instalments over time, after paying a deposit. A term payments plan is also called hire
purchase because the purchaser actually hires the item until it is completely paid off. Special offers
can include interest-free periods, but there may be other conditions such as establishment fees and
extra charges if the regular repayments are not paid on time. Also, if the purchaser fails to keep up
with the payments, higher interest may be charged or the item may be repossessed (taken back).
Example
16
Sonia purchases a new fridge and dishwasher package valued at $4925. She pays a 10%
deposit and repays the balance in monthly instalments over 3 years. Interest on the balance is
charged at a flat rate of 12% p.a. Find:
the deposit paid
the balance owing
the interest charged on the balance
the total to be repaid
the amount of each instalment
the total price paid for the package.
iStockphoto/gabyjalbert
a
b
c
d
e
f
Solution
a Deposit 10% 3 $4925
$492:50
b Balance owing $4925 $492:50
$4432:50
or 90% 3 $4925
c Interest charged on the balance is flat or simple interest.

P $4432.50 3 R 0.12, N 3
I PRN
$4432:50 3 0:12 3 3
$1595:70
d Total to be repaid balance interest
$4432:50 $1595:70
$6028:20
44
e Monthly instalment $6028:20 4 36

$167:45
3 years 3 3 12 months
36 months
f Total price paid deposit total repayments

$492:50 $6028:20
$6520:70
or cash price interest

or $4925 $1595.70
9780170194662
for the A
10 10A
Deferred payment plan

With a deferred payment plan, the customer does not make any repayments until a later date, such
as after three years.
Deferred means delayed.
Example
17
Ilhea and Robert purchase a $1600 home theatre system on a deferred payment plan over 2
years. They make no repayments for the first 3 months, then pay $105 per month.
a Calculate the total repayments.
b How much interest did they pay?
c Ilhea and Robert were also charged the following fees for the plan.
One-off establishment fee of $25
Account service fee of $4.95 per month
i How much was paid in fees over the 2-year period?
ii What percentage (correct to one decimal place) of the purchase price was paid in fees?
Solution
a Total cost $105 3 21
$2205
2 years 3 months 21 months
b Interest total cost cash price

$2205 $1600
$605
c
i Total fees paid $25 $4:95 3 24

$143:80
$143:80
3 100%
$1600
8:9875%
ii Percentage
Shutterstock.com/Viktorus
9:0%
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Exercise 2-06
See Example 16
Term payments
1 Gaspard purchases a laundry package of washing machine and dryer valued at $1755. He pays
a 10% deposit and repays the balance in 18 months. Interest on the balance is charged at a flat
rate of 13.85% p.a. Find:
a the deposit Gaspard paid
c the interest charged on the balance
e the amount of each monthly instalment
b the balance owing

d the total to be repaid
f the total price paid for the package
2 Maree bought a backyard swimming pool for $25 500. She paid a 5% deposit and will repay
the balance over 5 years, with flat-rate interest charged 8.6% p.a. Calculate:
a the deposit
b the balance owing
c the interest charged
e the monthly instalment
f the total price paid.
3 Sarah wants to buy a new 3-piece lounge suite that she saw
advertised at the lounge sale pictured, costing $6895.
a How much deposit will she have to pay?
b What will be the flat-rate interest on the balance?
c Find the size of each monthly repayment.
4 Peter pays a $1200 deposit on his holiday
and then $185 per month for a year. The
cash price of the holiday is $2700.
a How much did Peter pay for his holiday?
b Calculate the interest paid.
c Calculate the balance owing after the deposit
was paid.
d Calculate, as a percentage correct to one
decimal place, the flat interest rate charged p.a.
5 Mrs Allan buys a used car for her daughter by
paying a 20% deposit and $275 per month for
4 years. If the car has a cash price of $10 400, find:
a the deposit Mrs Allan paid
b the balance owing after the deposit is paid
c the total amount Mrs Allan repaid in instalments
d the interest charged
e the flat interest rate (p.a.), correct to one
decimal place.
6 Ming wanted to buy a new smartphone costing $329.
a How much deposit did she pay?
b How much did she pay altogether for the
smartphone?
c What was the total interest paid for the year?
d What was the annual simple interest rate for this
purchase? Answer correct to 2 decimal places.
46
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10 10A
7 Derek bought a laptop computer priced at $800 on a deferred payment plan: nothing to pay
for 3 months and then 9 monthly payments of $110. However, a monthly account fee of $6.95
was added to the plan.
a Find the total cost of the laptop computer to Derek.
See Example 17
b How much in excess of the cash price was paid?

c What is the flat rate of interest p.a. (correct to one decimal place) charged?
8 Tahlia bought a new outdoor setting and BBQ for her backyard that retails for $2899.
She paid $300 deposit, no payments for 6 months and then fortnightly payments of $63 for
2 years.
a Find the balance owing after Tahlia had paid the deposit.
b Calculate the total cost of the outdoor setting and BBQ.
c How much in excess of the cash price did Tahlia pay under this plan?
d What is the annual flat rate of interest charged, correct to one decimal place?
9 Sophie bought a home cinema system priced at $2100 on interest-free terms for one year with
no repayments for the first 4 months.
a If Sophie makes 8 equal monthly repayments, what is the amount of each payment?
b There is a service charge of $12.95 every month for this deferred payment plan. What
percentage (correct to one decimal place) of the purchase price was paid in service charges?
2-07 Depreciation
Depreciation is the decrease in value of an item over time. When items we buy lose value because
of age or frequency of use, they are said to depreciate.
The compound interest formula can be adapted to find the depreciated value of an item. While
compound interest involves repeated percentage increases, depreciation involves repeated
percentage decreases, so its formula has a minus sign.
NSW
Worksheet
Depreciation
MAT10NAWK10006
Summary
Depreciation formula
A P(1 R) n, where:
A is the final value of the item
P is the original value of the item
R is the rate of depreciation per period, expressed as a decimal
n is the number of periods of depreciation
The amount of depreciation is then calculated using this formula:
Depreciation original value final value
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Example
18
An accountants computer and printer depreciates by 15% each year.

a If the computer and printer are currently valued at $2600, what will its value be in 5 years?
b What is the depreciation over this time?
Solution
a P $2600, R 15% 0.15, n 5
A P1 Rn
$26001 0:155
$26000:855
$1153:633 . . .
$1153:63
The value of the items after 5 years is $1153.63.
b Depreciation $2600 $1153:63
$1446:37
Example
original value final value
19
An industrial oven in a restaurant originally costs $19 800, then depreciates at a rate of 12% p.a.
a Find the value of the oven after 6 years, correct to the nearest dollar.
b Express the depreciated value as a percentage of the cost price, correct to one decimal place.
Solution
a P $19 800, R 0.12, n 6
A P1 Rn
$19 8001 0:126
$19 8000:886
$9195:200 . . .
$9195
$9195
3 100%
$19800
46:4393 . . . %
b Percentage of cost price
46:4%
This means that after 6 years, the oven is worth approximately 46% of its original price
(or has lost 54% of its original value).
48
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Exercise 2-07
10 10A
Depreciation
1 Find the value of a photocopier after 5 years if its purchase price was $2850 and the annual
depreciation rate is 20%.
See Example 18
3 For each item shown in the table, calculate:

i its value after 4 years of depreciation
ii its value after 4 years as a percentage of its
original value, correct to one decimal place.
a
b
c
d
e
f
g
h
Item
Stove
Fishing boat
Library
Computer
Furniture
Bike
Electrical tools
Air conditioner
Original value
$1100
$5440
$8460
$1900
$27 500
$2300
$870
$1600
Depreciation rate (p.a.)

12%
18%
12%
20%
15.5%
22%
17.5%
9%
Shutterstock.com/Aneese
2 a Find the value of a car after 7 years if it is purchased new for $49 990 and it depreciates at 12% p.a.
b Find the amount of depreciation over this time.
4 A DVD recorder originally valued at $225 depreciates at 10% p.a.

a What percentage (to the nearest whole number) of the original value remains after:
i 1 year?
ii 3 years?
iii 6 years?
iv 7 years?
b Approximately how long would it take the DVD recorder to halve its original value?
5 A security system costs a company $12 500 to buy new. It depreciates at a yearly rate of 20%.
a Find the value of the system after:
i 1 year
ii 2 years
iii 5 years
b Find the value of the system after 5 years as a percentage of its original value. Answer
correct to one decimal place.
6 Paul pays $15 800 for a new car. The car will depreciate in value by an average of 11% p.a.
a Find the market value of the car in 3 years.
b Calculate the amount of depreciation in the car after 3 years.
7 Asha has spent $12 400 on equipment to set up his painting business. The equipment
depreciates at 15% per year.
a Find the value of the equipment after 4 years.
b Find the amount of depreciation in the equipment after 2 years.
c Find, by trial and error, how long it will take for the value to be under $3000. Answer in
years and months.
d Find the value of Ashas equipment after 9 years as a percentage of its original value, correct
to one decimal place.
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Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
8 A salesperson claims that, at 10% p.a. depreciation, a car will lose half its value after 7 years.
Is the salesperson correct? Show all working to justify your answer.
9 Office equipment worth $12 000 when new,
depreciates at 15% p.a. as shown in the
table below.
a How much did the office equipment lose
in value in the first year?
b After how many years did the office
equipment fall below half its original
value?
c By how much did the office equipment
depreciate between the 5th and 6th years?
d Will the value of the office equipment
ever fall below $100?
e Will the value of the office equipment
ever be zero?
Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Depreciated value
$12 000
$10 200
$8670
$7369.50
$6264.08
$5324.46
$4525.79
$3846.93
$3269.89
$2779.40
$2362.49
$2008.12
$1706.90
$1450.87
$1233.24
Power plus
1 How long, in years and days, will it take an investment of $3000 to earn $500 in
simple interest at 4% p.a.?
2 What amount should I invest to earn $100 in simple interest if the investment will
last for 9 months and the interest rate is 3% p.a.?
3 A principal of $10 000 is invested for 5 years at an interest rate of 5% p.a., with
interest compounded weekly. Calculate the final value of the investment.
4 Ali needs $80 000 in 4 years time. What amount should she invest now at an interest
rate of 6% p.a., with interest compounded annually, to reach her target?
5 A painting appreciates in value at a rate of 3% p.a. while a computer depreciates in
value at a rate of 10% p.a. If I bought the painting for $1200 and the computer for
$1500 new, what would be their combined value in 5 years time?
6 A bacteria colony is growing at a rate of 20% per hour. If there are 10 000 bacteria
now, use the compound interest formula to calculate how many there will be
after 1 day. (Give your answer correct to the nearest 10 000.)
7 a You invest $2000 in a bank account at an interest rate of 4% p.a. with interest
compounded annually. How long will it take for your investment to double in
value?
b If you invested $4000 instead of $2000 at the same interest rate, how long will it
take to double in value?
c Does the size of the principal make any difference to the time taken for it to double?
50
9780170194662
Chapter 2 review
n Language of maths
Puzzle sheet
allowable deductions
annual leave loading
compound interest
deposit
depreciation
double time
flat rate
fortnightly
gross pay
income tax
interest
net pay
overtime
PAYG tax
per annum (p.a.)
principal
quarterly
repayment
salary
simple interest
taxable income
term payments
time-and-a-half
wage
Interest and
depreciation crossword
MAT10NAPS10007
1 When investing, why is compound interest better than simple interest?

2 What do the P and R stand for in the formulas I PRN and A P(1 R) n?
3 What is another name for flat-rate interest?
4 What word means a decrease in the value of an item over time?
5 Why is gross pay higher than net pay?
6 Use a dictionary to find at least two different meanings of principal.
n Topic overview
Quiz
Money and finance
Which parts of this chapter were revision of Year 9 knowledge and skills?
Which parts of this chapter were new to you?
Do you know how to use the simple interest and compound interest formulas?
How is income tax calculated?
How is the depreciation formula similar to the compound interest formula?
MAT10NAQZ00009
Copy and complete this mind map of the topic, adding detail to its branches and using pictures,
symbols and colour where needed. Ask your teacher to check your work.
Earning an
income
Income tax
Simple interest
Interest and
depreciation
Compound interest
Depreciation
Term payments
9780170194662
51
Chapter 2 revision
See Exercise 2-01
1 Hayley is paid a commission of 2.5% on the value of the properties she sells. She also receives
a weekly retainer of $1150. How much will Hayley earn if she sells a house for $475 830?
See Exercise 2-01
2 Thomas earns a salary of $70 400 p.a. How much is he paid each week?
See Exercise 2-01
3 A supermarket cashier is employed under the following award.

Normal rate: $19.45 per hour
Normal rate
For 0 to 38 hours worked
Time-and-a-half
For the next 4 hours worked
Double time
For each hour worked after that
Calculate the wage for working:
a 40 hours
b 46 hours.
See Exercise 2-01
4 For his Christmas holidays, Jacan received 4 weeks normal pay plus 17.5% annual leave
loading for the 4 weeks. If Jacans annual salary is $54 920, find:
a his normal weekly pay
b his leave loading
c his total pay for the four-week holiday.
See Exercise 2-02
5 Alia earns a salary of $68 650 p.a. Her allowable deductions are donations to charities of $540
and work-related expenses of $385.
a Calculate Alias taxable income.
b Use the tax table on page 30 to calculate the income tax that Alia should pay.
See Exercise 2-03
6 Calculate the simple interest earned on each investment.

a $20 000 invested for 3 years at 4% p.a.
b $7850 invested at 2.5% p.a for 2 years
c $4500 invested for 6 months at 3.5% p.a.
d $25 200 invested for 100 days at 9% p.a.
See Exercise 2-04
7 An amount of $5000 is invested at 6% p.a. interest, compounded over 3 years.

a What is the total value of the investment after 3 years?
b What is the amount of compound interest earned?
See Exercise 2-05
8 Calculate the value of the investment when $34 200 is invested at 3% p.a. for 2 years, with
interest compounded annually.
See Exercise 2-05
9 Find the final value if $11 000 is invested for 4 years at 8.4% p.a., with interest compounded
monthly.
See Exercise 2-05
10 Find the interest earned when $4895 is invested at 5.5% p.a. for 3 years, with interest
compounded annually.
See Exercise 2-05
11 Calculate the interest earned when $46 230 is invested for 9 years at 7.8% p.a., with interest
compounded twice a year.
52
9780170194662
Chapter 2 revision
12 Yang purchases a furniture package valued at $4875. She pays a 10% deposit and repays the
balance in 36 monthly instalments. Interest on the balance is charged at a flat rate of 14.5%
p.a. Find:
a the deposit Yang paid
b the balance owing
c the interest charged
e the amount of each instalment
f the total price Yang paid for the package.
See Exercise 2-06
13 Caroline bought a new car for $14 990, which depreciates by 10% p.a.
a Find the depreciated value of the car after 5 years.
b What is the depreciation over this time?
c Express the depreciated value as a percentage of the original price (correct to one decimal
place).
See Exercise 2-07
9780170194662
53

Chapter 2 Interest and Depreciation

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Number and Algebra

allowable deduction A part of a persons yearly income

depreciation The decrease in the value of items over time

compound interest Interest calculated on the principal

instalment or repayment The amount of money paid at

n In this chapter you will:

c 12% of $37 450

b One year _________ fortnights

Evaluate, correct to the nearest cent:

Copy and complete:

How many months are there in:

Convert each percentage to a decimal.

b $28 000 3 (1.03) 6

2-01 Earning an income

Wages, salaries and overtime

A wage is calculated from the number of

time-and-a-half 1.5 3 normal hourly rate

Thomas earns a salary of $70 400 p.a.

p.a. per annum per year

Rounded to the nearest cent.

b Fortnightly income 2 3 $1349:18

c Monthly income $70 400 4 12

Rounded to the nearest cent.

Commission, piecework and annual leave loading

Commission is earned by salespeople and agents,

Georgia is a real estate agent and is paid a commission

A retainer is a fixed amount

Total earnings commission retainer

[ Georgia earns $4562.50.

b Annual leave loading 17:5% 3 $1352:82 3 4

Express all answers correct to the nearest cent where necessary.

She is paid at the following rates.

What is Idras total income for the week?

Natural cleaning spray

b Jamilla earns $2000 per fortnight

The Australian Government sets the

Investigation: Workers entitlements

2-02 Income tax

Tax on this income

Source: Australian Taxation Office for the Commonwealth of Australia

Rounded down to the nearest dollar.

b According to the table, a taxable income of $62 251 is in the

PAYG tax and net pay

PAYG tax withheld

Net pay gross pay total

Total deductions 3 100

b the amount of tax payable.

Hourly pay rate: $19.45

Technology Online income tax calculators

2-03 Simple interest

Find the simple interest on:

b $13 500 at 5.5% p.a. for 7 months

b P $13 500, R 5.5% 0.055, N 7 years

Rounded up to the nearest cent.

Rounded up to the nearest cent.

2 Calculate the flat-rate interest charged on each loan.

b $18 900 for 5 12 years at 5.7% p.a.

12 To save for a holiday, Dariya invested $3480 for

2-04 Compound interest