Grade 9 Financial Maths

Grade 9 financial maths: profit and loss, discount, simple and compound interest, hire purchase, exchange rates and commission, with worked examples.

Financial maths uses percentages to answer real money questions: profit and loss, discounts, VAT, commission, hire purchase, exchange rates and interest. In Grade 9 you calculate simple interest, where interest is only earned on the original amount, and compound interest, where interest is earned on interest too.

These skills are useful outside school as well, for comparing loans, budgeting and shopping. Grade 10 turns them into the formulas A = P(1 + in) and A = P(1 + i)ⁿ.

Key concepts

  • Percentage increase and decrease, discount and VAT
  • Profit, loss, cost price and selling price
  • Simple interest: SI = P × i × n
  • Compound interest calculated year by year
  • Hire purchase: deposit plus monthly instalments
  • Exchange rates and commission

Worked examples

R2 000 is invested at 6% p.a. simple interest for 3 years. How much interest is earned?

SI = P × i × n = 2 000 × 0.06 × 3 = R360. The final amount is R2 360.

R2 000 is invested at 6% p.a. compound interest for 3 years. Find the final amount.

Year 1: 2 000 × 1.06 = 2 120. Year 2: 2 120 × 1.06 = 2 247.20. Year 3: 2 247.20 × 1.06 = R2 382.03. That is R22.03 more than with simple interest.

A phone costs R4 500. You pay a 10% deposit and 12 monthly instalments of R400. What do you pay in total?

Deposit = 10% of R4 500 = R450. Instalments = 12 × R400 = R4 800. Total = R5 250, which is R750 more than the cash price.

A jacket costs R800 and is on sale at 25% off. What is the sale price?

Discount = 25% of R800 = R200. Sale price = R800 − R200 = R600 (or 0.75 × R800).

Common mistakes

  • Using 6 instead of 0.06 (or 6/100) for 6%.
  • Calculating compound interest as if it were simple interest.
  • Forgetting the deposit when finding the total hire purchase cost.
  • Finding the discount but not subtracting it from the price.

Exam tips

  • Change percentages to decimals before multiplying.
  • Set out compound interest year by year in a table.
  • Write money answers to two decimal places with an R.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus the interest already added, so the investment grows faster.

Why is hire purchase more expensive than paying cash?

Because you pay interest on the money you owe while you pay it off. The total of the deposit and instalments is more than the cash price.

How do exchange rates work?

An exchange rate tells you how much one currency is worth in another. If $1 = R18, then $50 costs 50 × R18 = R900.

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