Simple and compound interest, depreciation, future and present value annuity formulas for Grade 12 CAPS financial mathematics, with NSC exam usage notes.
Financial mathematics is the most formula-dependent topic in CAPS. Every formula below is on the NSC information sheet, so marks are lost through wrong n values and wrong interest conversion, not memory.
| Formula | Expression | Note |
|---|---|---|
| Simple interest (linear growth) | A = P(1 + in) | Interest is calculated on the original amount only. |
| Simple decay (straight-line depreciation) | A = P(1 − in) | Book value drops by the same amount each year. |
| Compound interest | A = P(1 + i)ⁿ | Convert the rate and n to the same compounding period first. |
| Compound decay (reducing balance) | A = P(1 − i)ⁿ | Used for depreciation on reducing balance. |
| Nominal to effective rate | 1 + i_eff = (1 + i_nom/m)^m | m is the number of compounding periods per year. |
| Future value annuity | F = x[(1 + i)ⁿ − 1]/i | Savings and sinking funds — payments made at the end of each period. |
| Present value annuity | P = x[1 − (1 + i)⁻ⁿ]/i | Loans and bonds — outstanding balance calculations. |
Some are printed on the official information sheet, but not all. Treat every formula on this page as examinable and learn it with a worked example so you recognise when to use it.
Finance, Growth & Decay is examined in Paper 1 of the NSC Mathematics examination.
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