JSS2 First Term Mathematics Lesson Note – Transactions in The Homes and Offices II

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WEEK 6

TRANSACTIONS IN THE HOMES AND OFFICES

CONTENT

• Commercial Arithmetic (simple interest, profit and loss, discount, commission, VAT, hire purchase)
• Exchange rate

COMMERCIAL ARITHMETIC

Simple Interest

If you save your money with a bank, you will be paid some extra money called interest. On the other hand, if you borrow money from a bank you pay interest to the bank. The original money invested or borrowed is known as the principal or capital. The interest rate is often given in percentage and quoted as a rate per annum. For example, 5% rate means that the interest paid or received every year is 5% of the principal.

Example 1:

If you save N20000, then at the end of the year you will have your original money (principal) plus the interest

N20 000 + 5% of N20 000 = N20 000 + N1000 = N21 000

The interest is N1000 and the amount you now have in your saving account is N21 000

Note that (Amount = principal + interest).

Example 2:

Mr. Ogbeha saves N50 000 with a bank for 1 year with interest at 5 ½ % per annum.

1. Calculate the interest he will receive at the end of the year.
2. Calculate the simple interest for 4 ½ years.
3. What is the total amount he will save at the end of 4 ½ years

Solution:

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