Summary Financial Mathematics Study Notes

Financial Mathematics
MATHEMATICS GRADE 12
BY NIKITA VERMEULEN

, FINANCIAL MATHS
REVISION/BASICS

SIMPLE & COMPOUND GROWTH & DECAY


SIMPLE GROWTH & DECAY

The amount that an item or investment increases or decreases is calculated on the original amount and is the
same in each period.

Inflation is always compound interest.

 A=P ( 1+¿ )
Simple Interest:
 Simple Decay: A=P(1−¿)
 Another name for simple decay is straight line depreciation.

Where:

 A – final amount
 P – principle amount/starting value
 i – interest rate
o Written as a decimal
o Divide the given interest rate by 100
 n – number of time periods


COMPOUND GROWTH & DECAY

Interest or depreciation is calculated on the value of an investments or item at the end of each period.

Another name for compound decay is depreciation on a reducing balance.

 Compound Interest: A=P¿
 Compound Decay: A=P¿

Where:

 A – final amount
 P – principle amount/starting value
 i – interest rate
o Written as a decimal
o Divide the given interest rate by 100
 n – number of time periods


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