Financial mathematics

• What is the definition of wages?


  Money paid by employer to staff.
• How are wages typically paid?

  Wages are paid weekly or monthly based on hourly pay or annual salary.
• If someone earns £5.52 per hour and works for 10 hours, how much do they earn?

  £55.20
• How much does Sophia earn from 8 hours of basic work and 3 hours of overtime?


  • Basic wage per hour: £2.73
  • Overtime wage per hour: £4.00
  • Total earnings: £33.84
• How do you calculate Owen's overtime hours worked if he earned £179.50 for 15 hours of basic work?


  1. Basic wage per hour: £6.50
  2. Total earned from basic work: £6.50 x 15 = £97.50
  3. Difference: £179.50 - £97.50 = £82.00
  4. Overtime hours: £82.00 ÷ £8.20 = 10 hours
• What is a salary?


  Money earned over a year.
• How is gross pay calculated from an annual salary of £18,000?


  Gross pay is £1,500 per month, calculated as £18,000 ÷ 12.
• What is net pay?


  Money received after deductions.
• What are the deductions from gross pay?


  • Income tax
  • National Insurance
  • Pension contributions
• If a shop assistant earns £1,500 a month and pays 20% tax and £100 National Insurance, what is their net pay?


  £1,100
• What is profit?


  A positive number resulting from sales exceeding costs.
• How do you calculate profit from buying a CD for £5.00 and selling it for £7.50?


  Profit is £2.50, calculated as £7.50 - £5.00.
• How do you determine if a transaction results in profit or loss?


  • Profit: Selling price > Cost price
  • Loss: Selling price < Cost price
• What does VAT stand for?


  Value Added Tax.
• What is the purpose of VAT?


  It is a purchase tax added to items.
• What is a bank statement?


  A record of payments going in and out of a bank account.
• What is the difference between direct debits and standing orders?


  Direct debits vary in amount, while standing orders are fixed amounts.
• What is the purpose of a savings account?


  To save money for particular goals without spending it.
• How do you calculate the total amount after 3 years for two different savings accounts with compound interest?


  • Account A: £5000 x 1.035^3 = £5,543.59
  • Account B: £5000 x 1.04 x 1.035 x 1.03 = £5,543.46
  • Best option: Account A has higher interest by 13p.
• What is the interest rate for Account A?


  1. 5% per year compound interest.
• What is the interest rate for Account B in the first year?


  4% in the first year.
• What happens to the interest rate for Account B in the second and third years?

  It is 3.5% in the second year and 3% in the third year.
• What is the condition for withdrawals in Account A?

  No withdrawals are allowed until the end of 3 years.
• What is the condition for withdrawals in Account B?

  Withdrawals are allowed anytime.