TOPIC 2

Financial mathematics [Stage 5.1]

2.1 Overview
Numerous videos and interactivities are embedded just
where you need them, at the point of learning, in your
­learnON title at www.jacplus.com.au. They will help you
to learn the concepts covered in this topic.

2.1.1 Why learn this?

Unfortunately for most of us, money is not in endless
supply. If we monitor our income and expenses we can
make our money go further. Understanding budgets and
investments can help us to keep track of our money and
reach our financial goals.

DISCUSSION
Is it important for individuals and society that every person understands how to manage their money or should it
be left to financial experts?

LEARNING SEQUENCE
2.1 Overview
2.2 [Stage 5.1] Salaries and wages
2.3 [Stage 5.1] Special rates
2.4 [Stage 5.1] Piecework
2.5 [Stage 5.1] Commissions and royalties
2.6 [Stage 5.1] Loadings and bonuses
2.7 [Stage 5.1] Taxation and net earnings
2.8 [Stage 5.1] Simple interest
2.9 [Stage 5.1] Compound interest
2.10 Review

LEARNING OUTCOMES
A student:
• uses appropriate terminology, diagrams and symbols in mathematical contexts MA5.1-1WM
• selects and uses appropriate strategies to solve problems MA5.1-2WM
• provides reasoning to support conclusions that are appropriate to the context MA5.1-3WM
• solves financial problems involving earning, spending and investing money MA5.1-4NA

CONTENT DESCRIPTIONS
Students:
Solve problems involving earning money (NSW)
Solve problems involving simple interest (ACMNA211)
Connect the compound interest formula to repeated applications of simple interest using appropriate digital technologies (ACMNA229)
Source: NSW Syllabus for the Australian curriculum

TOPIC 2 Financial mathematics 25

 RESOURCES — ONLINE ONLY

eLesson: The story of mathematics — The high life (eles-1698)

Note: Your teacher may now set you a pre-test to determine how familiar you are with the content in this
topic.

2.2 Salaries and wages [Stage 5.1]

2.2.1 Salaries and wages
•• Employees may be paid for their work in a variety of ways. Most employees receive either a wage or
a salary.

2.2.2 Salaries
•• A salary is a fixed annual (yearly) amount, usually paid fortnightly or monthly. A person who receives
a salary is paid to do a job, regardless of the number of hours worked.

WORKED EXAMPLE 1

Susan has an annual salary of $63 048.92. How much is she paid:
a weekly b fortnightly c monthly?

THINK WRITE
a 1 Annual means per year, so divide the salary a 63 048.92 ÷ 52 ≈ 1212.48
by 52 because there are 52 weeks in a year.
2 Write the answer in a sentence. Susan’s weekly salary is $1212.48.
b 1 There are 26 fortnights in a year, so divide b 63 048.92 ÷ 26 ≈ 2424.96
the salary by 26.
2 Write the answer in a sentence. Susan’s fortnightly salary is $2424. 96.
c 1 There are 12 months in a year, so divide c Monthly salary = 63 048.92 ÷ 12
the salary by 12.        ≈ 5254.08
2 Write the answer in a sentence. Susan’s monthly salary is $5254.08.

2.2.3 Wages
•• A wage is based on a fixed rate per hour. Hours outside the normal work period are paid at a higher rate.

WORKED EXAMPLE 2

Frisco has casual work at a fast-food store. He is paid $12.27 per hour Monday to Saturday and
$24.54 per hour on Sunday. Calculate his wage for a week in which he worked from 5.00 pm to
10.00 pm on Friday and from 6.00 pm to 9.00 pm on Sunday.
THINK WRITE

1 Work out the number of hours Frisco worked each day. Friday: 5 × 12.27 = 61.35
He worked 5 hours on Friday and 3 hours on Sunday.
2 Find the total amount earned. 61.35 + 73.62 = 134.97
3 Write the answer in a sentence. Frisco’s wage was $134.97.

26 Maths Quest 9 Stage 5 NSW Australian curriculum

 ACTIVITY: COMPARING PAY RATES AND CONDITIONS
Working in small groups, collect a number of job advertisements. They should be obtained from a mixture of
print and digital sources. Compare the pay rates and conditions for the different positions and present a report
to the class.

RESOURCES — ONLINE ONLY

Interactivity: Salaries (int-6067)

Digital doc: SkillSHEET Converting units of time (doc-10849)
Digital doc: SkillSHEET Multiplying and dividing a quantity (money) by a whole number (doc-10850)
Digital doc: SkillSHEET Multiplying and dividing a quantity (money) by a fraction (doc-10851)
Digital doc: SkillSHEET Increasing a quantity by a percentage (doc-10852)
Digital doc: SkillSHEET Adding periods of time (doc-10853)

Exercise 2.2 Salaries and wages

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–6, 8, 11, 13 1–6, 7, 9, 10, 12, 14, 15, 17 1–6, 9, 12–21

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. WE1 Johann has an annual salary of $57 482. How much is he paid:
a. weekly b. fortnightly c. monthly?
2. Anna earns $62 300 per year. How much does she earn:
a. weekly b. fortnightly c. monthly?
3. Find the annual salary of workers with the following weekly incomes.
a. $368 b. $892.50 c. $1320.85
4. How much is earned per year by those paid fortnightly salaries of:
a. $995 b. $1622.46 c. $3865.31?
5. Which of each pair is on the higher salary?
a. $3890 per month or $45 700 per year
b. $3200.58 per fortnight or $6700 per month
6. Find the hourly rate for these workers.
a. Rahni earns $98.75 for 5 hours.
b. Francisco is paid $54.75 for 4 12 hours.
c. Nhan earns $977.74 for a 38-hour week.
d. Jessica works 7 12 hours a day for 5 days to earn $1464.75.

TOPIC 2 Financial mathematics 27

 7. Henry is a second-year ­apprentice
motor mechanic. He receives the
award wage of $12.08 per hour.
Jenny, a ­fourth-year apprentice,
earns $17.65 per hour.
a. How much does Henry earn in a
38-hour week?
b. How much more does Jenny earn
in the same period of time?
8. WE2 Juan has casual work for
which he is paid $13.17 per hour
Monday to Saturday and $26.34
per hour on Sundays. Calculate his
total pay for a week in which he
worked from 11.00 am to 5.00 pm
on Thursday and from 2.00 pm to
7.00 pm on Sunday.
9. Mimi worked the following hours in one week.
Wednesday 5.00 pm to 9.00 pm
Thursday 6.00 pm to 9.00 pm
Friday 7.00 pm to 11.00 pm
If her pay is $21.79 per hour up to 9.00 pm and $32.69 per hour after that, what is her total pay?
10. Who earns more money each week: Rhonda, who receives $38.55 an hour for 38 hours work, or Rob,
who receives $41.87 an hour for 36 hours work?
11. Glenn is a chef and receives
$1076.92 for a week in which he
works 35 hours. What is his hourly
rate of pay?
12. Julie is considering two job offers
for work as a ­receptionist. Job
A pays $878.56 for a 38-hour
­working week. Job B pays $812.16
for a 36-hour ­working week. Which
job has the higher hourly rate
of pay?
13. Russell and Gabrielle go to work in
different ­department stores. Russell
is paid $981.77 per week. Gabrielle
is paid $26.36 per hour. How many
hours must Gabrielle work to earn more money than Russell?
14. Calculate what pay each of the following salary earners will receive for each of the periods specified.
a. Annual salary $83 500, paid each week
b. Annual salary $72 509, paid each fortnight
c. Annual salary $57 200, paid each week
d. Annual salary $105 240, paid each month

28 Maths Quest 9 Stage 5 NSW Australian curriculum

Communicating, reasoning and problem solving
15. MC When Jack was successful in getting a job as a trainee journalist, he was offered the following
choice of four salary packages. Which should Jack choose? Show your working.
a. $456 per week b. $915 per fortnight
c. $1980 per calendar month d. $23 700 per year
16. In his job as a bookkeeper, Minh works 38 hours per week and is paid $32.26 per hour. Michelle, who
works 38 hours per week in a similar job, is paid a salary of $55 280 per year. Who has the higher
paying job? Show your working.
17. A lawyer is offered a job with a salary of $74 000 per year, or $40 per hour. Assuming that they work
80 hours every fortnight, which is the greater pay?
18. Over the last four weeks, a woman has worked 35, 36, 34 and 41 hours. If she earns $24.45 per hour,
how much did she earn for each of the two fortnights?
19. An employee brags that he
works a 40-hour week (8 hours a
day, Monday–Friday) and earns
$62 000 each year.
a. What is this as an hourly rate?
b. If the employee works on
average an extra half an hour a
day Monday–Friday and then
another 4 hours over the week-
end (for the same annual salary),
how is his hourly rate affected?
c. If the employee was earning the
hourly rate which he bragged
about and was being paid for
every hour worked, what would
be his potential earnings for
the year?
20. What would be your preferred method of being paid and why?
21. Mark saves $10 per week. Phil saves 5 cents in the first week, 10 cents the second week and doubles
the amount each week. How many weeks will it take for Phil to have more savings than Mark?

2.3 Special rates [Stage 5.1]

2.3.1 Overtime
• A normal Australian working week is 38 hours. Wage earners who work extra hours are ‘working
overtime’.
• Overtime is paid when a wage earner works more than the regular hours each week. When an
employee works overtime a higher rate is paid. This higher rate of pay is called a penalty rate.
The rate is normally calculated at either time and a half, which means that the person is paid
1 12 times the normal rate of pay; double time, which means that the person is paid twice the normal
rate of pay; or double time and a half, which means that the person is paid 2 12 times the normal rate
of pay.
• A person may also be paid these overtime rates for working at unfavourable times, such as at night or
during weekends.
• To calculate the hourly rate earned when working overtime, we multiply the normal hourly rate by the
overtime factor, which is 1 12 for overtime, 2 for double time and 2 12 for double time and a half.

TOPIC 2 Financial mathematics 29

 WORKED EXAMPLE 3

Ursula works as a waitress and earns $23.30 per hour.

Last week she received the normal rate for 30 hours of
work as well as time and a half for 3 hours of overtime
and double time for 5 hours of work on Sunday. What
was her total wage?

THINK WRITE

1 Calculate Ursula’s normal pay. Normal pay: 30 × 23.30 = 699.00

2 Calculate Ursula’s pay for 3 hours at time and a half. Overtime: 3 × 1.5 × 23.30 = 104.85
3 Calculate Ursula’s pay for 5 hours at double time. Sunday: 5 × 2 × 23.30 = 233.00
4 Find the total amount. Total = 1036.85
5 Write the answer in a sentence. Ursula’s total wage was $1036.85.

DISCUSSION
By how much would Ursula’s total wage vary if special rates did not exist?

2.3.2 Time sheets and pay slips

•• Employers often use records called time sheets to monitor the number of hours worked by each
employee.
•• Details of the hours worked and the rate of pay are given to each employee on a pay slip, which they
receive with their wages.

WORKED EXAMPLE 4

Fiona works in a department store, and in the week before Christmas she works overtime. Her
time sheet is shown below. Fill in the details on her pay slip.

Normal O’time Pay slip for: Week ending

Start Finish hours 1.5 Fiona BLACK December 21
M 9.00 15.00 6 Normal hours
T 9.00 17.00 8 Normal rate $17.95
W 9.00 17.00 8
T 9.00 19.00 8 2 Overtime hours
F 9.00 19.00 8 2 Overtime rate
S Total wage

30 Maths Quest 9 Stage 5 NSW Australian curriculum

 THINK WRITE
1 Calculate the number of normal hours Normal hours: 6 + 8 + 8 + 8 + 8 = 38
worked.
2 Calculate the number of overtime hours Overtime hours: 2 + 2 = 4
worked.
3 Calculate the overtime rate. Overtime rate = 1.5 × 17.95
= 26.93
4 Calculate the total pay by ­multiplying the Total pay = 38 × 17.95 + 4 × 26.93
number of normal hours by the normal rate = 789.82
and adding the overtime amount, calculated
by multiplying the number of ­overtime hours
by the overtime rate.
5 Fill in the amounts on the pay slip. Pay slip for: Week ending
Fiona BLACK December 21
Normal hours 38
Normal rate $17.95
Overtime hours 4
Overtime rate $26.93
Total wage $789.82

RESOURCES — ONLINE ONLY

Interactivity: Special rates (int-6068)

Digital doc: SkillSHEET Multiplying a quantity (money) by a decimal (doc-10854)

Exercise 2.3 Special rates

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–5, 6, 9, 10, 13–15 1–5, 7, 9, 10, 13–16, 18 1–5, 8, 9, 11–22

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. Calculate the following special rates.
a. Time and a half when the hourly rate is $15.96
b. Double time when the hourly rate is $23.90
c. Double time-and-a-half when the hourly rate is $17.40
2. Calculate the following total weekly wages.
a. 38 hours at $22.10 per hour, plus 2 hours at time and a half
b. 40 hours at $17.85 per hour, plus 3 hours at time and a half
c. 37 hours at $18.32 per hour, plus 3 hours at time and a half and 2 hours at double time

TOPIC 2 Financial mathematics 31

 3. Julio is paid $956.08 for a regular 38-hour week.
a. What is his hourly rate of pay?
b. How much is he paid for 3 hours of overtime at time-and-a-half rates?
c. What is his wage for a week in which he works 41 hours?
4. WE3 Geoff is a waiter in a restaurant and works 8 hours most days. Calculate what he earns for
8 hours work on the following days.
a. A Monday, when he receives his standard rate of $21.30 per hour
b. A Sunday, when he is paid double time
c. A public holiday, when he is paid double time and a half
5. Albert is paid $870.58 for a 38-hour week. What was his total wage for a week in which he worked
5 extra hours on a public holiday with a double-time-and-a-half penalty rate?
6. Jeleesa (aged 16) works at a supermarket on Thursday nights and weekends. The award rate for a
16-year-old is $7.55 per hour. Calculate what she would earn for:
a. 4 hours work on Thursday night b. 6 hours work on Saturday
c. 4 hours work on Sunday at double time d. the total of the three days.
7. Jacob works in a pizza shop and is paid
$13.17 per hour.
a. Jacob is paid double time and a half
for public holiday work. What does
he earn per hour on public holidays?
(Answer to the nearest cent.)
b. What is Jacob’s pay for a public
­holiday where he works 6 hours?
8. If Bronte earns $7.80 on normal time,
how much does she receive per hour:
a. at time and a half
b. at double time
c. at double time and a half?
9. Copy and complete the following time sheet. Calculate the number of hours Susan worked this week.

Day Pay rate Start time Finish time Hours worked

Monday Normal 9.00 am 5.00 pm
Tuesday Normal 9.00 am 5.00 pm
Wednesday Normal 9.00 am 5.00 pm
Thursday Normal 9.00 am 5.00 pm
Friday Normal 9.00 am 3.00 pm

10. WE4 Copy and complete Susan’s pay slip for the week described in question 9.

Pay slip for: Susan WHITE Week ending 17 August

Normal hours
Normal pay rate $25.60
Overtime hours 0
Overtime pay rate $38.40
Total pay

32 Maths Quest 9 Stage 5 NSW Australian curriculum

11. Below is a time sheet for Jason, who works in a department store. Copy and complete the table.

Day Pay rate Start time Finish time Hours worked

Monday Normal 9.00 am 5.00 pm
Tuesday Normal 9.00 am 5.00 pm
Wednesday Normal __
Thursday Normal 1.00 pm 9.00 pm
Friday Normal __
Saturday Time and a half 8.00 am 12.00 pm

12. Copy and complete the pay slip for Jason for the week described in question 11.

Pay slip for: Jason RUDD Week ending 21 December

Normal hours
Normal pay rate $10.90
Overtime hours
Overtime pay rate
Total pay

13. Brett does shift work. Copy and complete his time sheet.

Day Pay rate Start time Finish time Hours worked

Monday Normal 7.00 am 3.00 pm
Tuesday Normal 7.00 am 3.00 pm
Wednesday
Thursday
Friday Normal 11.00 pm 7.00 am
Saturday Time and a half 11.00 pm 7.00 am
Sunday Double time 11.00 pm 7.00 am

14. Copy and complete Brett’s pay slip for the week described in question 13.

Pay slip for: Week ending

Brett SIMPSON 15 September
Normal hours
Normal pay rate $16.80
Time-and-a-half hours
Time-and-a-half pay rate
Double time hours
Double time pay rate
Gross pay

TOPIC 2 Financial mathematics 33

Communicating, reasoning and problem solving
15. Calculate the following total weekly wages.
a. 38 hours at $18.40 per hour, plus 2 hours at time and a half
b. 32 hours at $23.70 per hour plus 6 hours on a Sunday at double time
c. 38 hours at $26.42 per hour, plus 2 hours overtime at one and a half the normal rate and 4 hours on a
public holiday that incurred the maximum penalty rate
16. Ruby earns $979.64 for her normal 38-hour week, but last week she also worked 6 hours overtime at
time-and-a-half rates.
a. Calculate how much extra she earned and give a possible reason for her getting time-and-a-half rates.
b. What was Ruby’s total wage?
17. MC A standard working week is 38 hours and a worker puts in 3 hours overtime at the time-and-
a-half rate and 2 hours at double time. To how many hours at the standard rate is her total work
time equivalent?
1 1
a. 43 b. 46 c. 44 d. 45
2 2
18. Glen works 32 hours per week at $22 per hour and is paid overtime for any time worked over the
32 hours per week. In one week Glen worked 42 hours and was paid $814. Overtime is paid at
1.5 times the standard wage. Was Glen paid the correct amount (yes or no)? If no, then provide
the correct amount.
19. Joshua’s basic wage is $22 per hour. His overtime during the week is paid at time and a half. Over
the weekend he is paid double time. Calculate his gross wage in a week when he works his basic
40 hours, together with 1 hour overtime on Monday, 2 hours overtime on Wednesday and 4 hours
­overtime on Saturday.
20. The table below shows the pay sheet for a small company. If a person works up to 36 hours, the
­regular pay is $14.50 per hour.
For hours over 36 and up to 40, the overtime is time and a half.
For hours over 40, the overtime is double time.
Complete the table.

Hours worked Regular pay Overtime pay Total pay

a 32
b 38.5
c 40.5
d 47.2

21. Vicki is a supervisor at a local factory. Each fortnight she calculates the wages of the employees.
Overtime is paid to any employee who works more than 35 hours each week. The overtime rate is
1 12 times the hourly rate. The table below shows the number of hours worked and the hourly rates for
three employees for one fortnight.

Employee Hours worked Hourly rate

Stewart 72 $12.75
Helen 56 $19.80
Amber x $21.50

34 Maths Quest 9 Stage 5 NSW Australian curriculum

 a. Determine the total amount, in dollars, in wages for each of Helen and Stewart. Write your answer to
the nearest cent.
b. Amber worked for x hours including some overtime. Her fortnightly wage was $1988.75.
i. Determine the number of hours she worked.
ii. Was it possible for Amber to earn this amount if she did not do any overtime?
c. Tax is charged at 45 cents in each dollar earned. Determine the amount of tax, in dollars, that Amber
pays for the fortnight. Write your answer correct to the nearest cent.
22. In what situations would being paid according to time sheets be preferable to receiving a wage
or salary?

2.4 Piecework [Stage 5.1]

2.4.1 Non-wage earnings — piecework
•• Piecework is a system of payment by which a worker is paid a fixed amount for each job or task
they complete.

WORKED EXAMPLE 5

Mitchell has a job washing cars in a car yard. He is paid $5.20 per car washed. Calculate the
amount Mitchell earns in an afternoon when he washes 24 cars.
THINK WRITE
1 Multiply the number of cars Mitchell washes by Amount earned = 24 × 5.20
the amount paid for each car. = 124.80
2 Write the answer in a sentence. Mitchell earns $124.80.

•• A person may also be paid on a sliding scale where the pay rate increases as the number of completed
tasks increases.

WORKED EXAMPLE 6

Angelica is a machinist in a
clothing factory. Each
week she is paid $4.28 per
garment for the first 180
garments, and $5.35 per
garment thereafter. What
will she be paid if she
produces 223 garments?

TOPIC 2 Financial mathematics 35

 THINK WRITE
1 Calculate the number of ‘extra’ garments Angelica Extra garments = 223 − 180
makes. = 43
2 Calculate her total payment by adding the Payment = 180 × 4.28 + 43 × 5.35
­payment she receives for the first 180 garments = 1000.45
to the ­payment she receives for the extra
garments.
3 Write the answer in a sentence. Angelica earns a total payment of $1000.45.

•• In some cases, piecework is paid for multiple units rather than single units. For example, for ­letterbox
deliveries you may be paid per 1000 deliveries made.

WORKED EXAMPLE 7

Holly is delivering brochures to letterboxes in her local area. She is paid $43.00 per 1000
­brochures delivered. Calculate the amount Holly will earn for a delivery of 3500 brochures.
THINK WRITE
1 Calculate the number of thousands of 3500 ÷ 1000 = 3.5
­brochures Holly will deliver. So Holly will deliver 3.5 thousand brochures.
2 Multiply the number of thousands of Holly’s pay = 3.5 × 43.00
­brochures delivered by 43 to calculate what = 150.50
Holly will earn.
3 Write the answer in a sentence. Holly will earn $150.50.

RESOURCES — ONLINE ONLY

Interactivity: Piecework (int-6069)

Digital doc: WorkSHEET Financial mathematics (doc-10855)

Exercise 2.4 Piecework

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–5, 7 1–5, 6, 7, 9 1, 2, 4, 6–12

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. WE5 Hitani is paid 65 cents for each teacup she decorates. How much is she paid for decorating
150 teacups?
2. WE6 Jack makes leather belts. The piece rate is $1.25 each for the first 50 belts and $1.50 ­thereafter.
What is his income for a day in which he produces 68 belts?

36 Maths Quest 9 Stage 5 NSW Australian curriculum

 3. A production-line worker is paid $1.50 for each of the first 75
toasters assembled, then $1.80 per toaster thereafter. How much
does she earn on a day in which she assembles 110 toasters?
4. WE7 Rudolf earns $42.50 per 1000 leaflets delivered to
­letterboxes. Calculate what Rudolf will earn for a week in
which he delivers 7500 leaflets.
5. Dimitri earns $7.20 for each box of fruit picked.
a. How much does he make for picking 20 boxes?
b. How many boxes must he pick to earn at least $200?
c. If he takes 4 hours to pick 12 boxes, what is his hourly rate
of pay?
6. Pauline uses her home computer for word processing under
­contract to an agency. She is paid $3 per page for the first
50 pages, $4 per page from 51 to 100 pages, and $5 per
page thereafter. Calculate her total pay for a period in which
she prepares:
a. 48 pages b. 67 pages c. 123 pages.
Communicating, reasoning and problem solving
7. Rani delivers bills to letterboxes and is paid $43 per thousand.
a. How much does she earn for delivering 2500 items?
b. How many thousands must she deliver to earn at least $1000?
c. If she takes 6 hours to deliver each thousand on average, what is her hourly rate of pay?
8. Georgio delivers pizzas. He is paid $3 per
delivery from 5 pm to 9 pm and $4 per
delivery after 9 pm.
a. How much does he earn on a night in
which he makes 12 deliveries by 9 pm
and 4 deliveries between 9 pm and
10.30 pm?
b. What are his average earnings per hour if
he has worked from 5 pm to 10.30 pm?
9. A shoemaker is paid $5.95 for each pair of
running shoes he can make.
a. If the shoemaker made 235 pairs of shoes
last week, what was the amount paid?
b. The shoemaker is offered a bonus of 5% if
he can make more than 250 pairs of shoes in a week. If he makes 251 pairs, what is the total amount
earned, including the bonus?
10. A secretarial assistant gets paid $12 per page that she types. If she manages to type more than
20 pages in a day, she gets a 10% bonus. If she typed 32 pages on Tuesday, how much did she earn?
11. There are both fixed and variable costs associated with some products. Consider the cost of importing
a radio from China and selling it in Australia. The costs for a particular company are:
• import of product $12.50 per unit
• transportation costs $400 per 1000 units
• warehouse rental space $1 per unit per month
• advertising costs $2000 per month (fixed cost).
a. If this company imports and sells 500 units per month, what is the total cost per month?
b. At 500 units per month and a selling price of $25.00, what is the total profit per month?
12. What are the advantages and disadvantages of being paid by piecework?

TOPIC 2 Financial mathematics 37

2.5 Commissions and royalties [Stage 5.1]
2.5.1 Non-wage earnings — commissions and royalties
•• Commission is a method of payment used mainly for salespeople. The commission paid is usually
calculated as a percentage of the value of goods sold.
•• A royalty is a payment made to a person who owns a copyright. For example, a musician who writes
a piece of music is paid a royalty on CD and online sales. An author who writes a book is also paid a
­royalty based on the number of books sold. Royalties are calculated as a percentage of sales.

WORKED EXAMPLE 8

Mohamad is a songwriter who is paid a royalty of 12% on all sales of his

music. Calculate the royalty that Mohamad earns if a song he writes sells
CDs to the value of $150 000.

THINK WRITE
1 Find the royalty by calculating 12% of $150 000. Royalty = 12% of 150 000
= 0.12 × 150 000
= 18 000
2 Write the answer in a sentence. Mohamad earns $18 000 in royalties.

•• Sometimes a salesperson is paid a small wage, called a retainer, plus a percentage of the value of the
goods sold.

WORKED EXAMPLE 9

Gemma, a car salesperson, is paid a retainer of $350 per week, plus a commission of 8% of the
profits made by the company on cars that she sells.
a How much does Gemma earn in a week when no sales are made?
b How much does she earn in a week when $5000 profit was generated by her sales?

THINK WRITE
a If no sales are made, only the retainer is paid. a Gemma earns $350.
b 1 Find the commission paid by calculating 8% b Commission = 8% of 5000
of $5000. = 0.08 × 5000
= $400
2 Find the total amount paid by adding the retainer Total earnings = 350 + 400
and the commission. = $750
3 Write the answer in a sentence. Gemma earns $750.

38 Maths Quest 9 Stage 5 NSW Australian curriculum

 •• Sometimes the commission is broken into several parts with differing rates.

WORKED EXAMPLE 10

A real estate agency receives 2% commission on the first $300 000 of a sale and 3% on the
remainder. How much commission is received on the sale of a $380 000 property?
THINK WRITE
1 Calculate the difference between $380 000 and 380 000 – 300 000 = 80 000
$300 000.
2 Calculate 2% of $300 000. 2% of 300 000 = 6000
3 Calculate 3% of $80 000. 3% of 80 000 = 2400
4 Calculate the total commission by adding 6000 + 2400 = 8400
the ­commission earned on $300 000 and the
­commission earned on $80 000.
5 Write the answer in a sentence. The commission received is $8400.

ACTIVITY: HOW MUCH ROYALTY/COMMISSION?

1. In pairs, collate a list of the commissions and royalties of some common professions. This i­nformation
can be obtained by contacting record companies, book publishers, art galleries and so on.
For ­commissions, contact car dealers and real-estate companies. Some of this information may be
obtained from the internet.
2. Discuss what professions or industries offer the highest commissions as a percentage. Does this mean
that they are paid more money?

RESOURCES — ONLINE ONLY

Interactivity: Commissions and royalties (int-6070)

Digital doc: SkillSHEET Converting a percentage to a decimal (doc-10856)
Digital doc: SkillSHEET Finding a percentage of a quantity (money) (doc-10857)
Digital doc: SpreadSHEET Converting percentages to fractions or decimals (doc-10905)
Digital doc: SpreadSHEET Finding a percentage of an amount (doc-10906)

Exercise 2.5 Commissions and royalties

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–5, 7, 11 1–4, 6, 7, 10, 11, 13 1, 3, 4, 5c, 6d, 7, 8, 9b, 10b, 11–17

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.

TOPIC 2 Financial mathematics 39

Understanding and fluency
1. WE8 Danyang is a writer who is paid a royalty of 10% on all sales. Calculate the royalty she earns in
a year if a book she writes sells copies to the value of $30 000.
2. A home improvements company pays commission at the rate of 16% on all sales. What would a
­person earn who had sales to the value of:
a. $8000 b. $6972.50?
3. Linda is a car salesperson who is paid a 1.5% commission on her sales. Calculate the amount of
money Linda earns in a week where her sales total $95 000.
4. WE9 Gordon is paid a retainer of $200 per week plus a commission of 6% of the profits made by the
company on the goods that he sells.
a. How much does Gordon earn in a week when no sales are made?
b. How much does Gordon earn in a week during which a $70 000 profit was generated by his sales?
5. Alfonso gets a retainer of $235 per week plus a commission of 5 12% on sales. What are his total
­earnings in a week in which his sales are:
a. $1000 b. $4500 c. $17 384?
6. Bryce is an author. His ­publisher
pays him a fixed allowance of
$500 per month, plus 4 12% ­royalty
on sales. What would be his
income for a month in which his
book sales totalled:
a. $0
b. $2000
c. $15 000
d. $23 750?
7. WE10 A real estate agency

receives 2% commission on the

first $250 000 of a sale and 4% on
the rest. How much ­commission is
received on the sale of a $370 000
property?
8. At a second real estate agency, the commission rate is 5% on the first $180 000 of sale price and 2%
on the remainder. Find the commission on the sale of the $370 000 property.
9. Ingrid’s real estate agency pays her 1% commission on the first $500 000 of sale price, then 4%
­thereafter. How much commission would she receive on the sale of a property worth:
a. $480 000 b. $510 000 c. $735 000?
10. Yanu works for a boat broker who pays him 6% of the first $50 000 of the sale price, then 3 34% on the
rest. Calculate the commission he receives on the following sales.
a. $40 000 b. $70 000 c. $395 000
Communicating, reasoning and problem solving
11. Veronica earns $400 per week plus 4% on sales, whereas Francis earns 6% commission only.
a. How much does each earn on sales of $8400?
b. What level of sales would yield each the same income?
12. Wolfgang, a car salesman, is paid a weekly retainer of $550, plus 10% of the dealer’s profit on each
­vehicle. Find his total income for weeks in which the dealer’s profits on vehicles he sold were:
a. $3500 b. $5980 c. $7036.00

40 Maths Quest 9 Stage 5 NSW Australian curriculum

13. Using the commission table for house sales below, calculate the commission on each of the
­following sales.

Sale price Commission Plus

Between $0 and $80 000 2% of sale price 0
Between $80 001 and 1.5% of amount over $80 000 $1600 (2% of $80 000)
$140 000
$140 000 and over 1.1% of amount over $140 000 $2500 (2% of $80 000 + 1.5%
of $60 000)

a. $76 000 b. $122 500 c. $145 000 d. $600 000

14. Mr Hartney is a used car salesman. He receives a basic monthly salary of $2400 together with 5%
commission on all sales. Although his sales for the month amounted to $48 300, he also had deduc-
tions for insurance ($12.80), association fees ($25.70) and income tax ($1100). Calculate the amount,
in dollars, he took home that month.
15. A rock musician makes a royalty on all record sales according to the following formula.

Sales from Sales to Royalty rate

0 $100 000 3%
$100 001 $500 000 3.5% on amount over
$100 000
$500 001 1 million 4% on amount over $500 000
1 million and above 5% on amount over 1 million

Calculate the musician’s royalties for the following years.

a. 2007 — sales = $456 000 b. 2008 — sales = $1 234 500
c. 2009 — sales = $986 400 d. 2010 — sales = $2 656 000
16. Four years ago Inka became an employee of TrakRight Tourism, where her starting annual ­salary was
$55 600. After her first year she received a 2% pay rise. The next year she received a 3% pay rise. Last
year she received an x% pay rise. If her annual salary is now $61 042, determine the value of x, correct
to 1 decimal place.
17. What are the major advantages and disadvantages of getting paid by commission or royalties?

2.6 Loadings and bonuses [Stage 5.1]

2.6.1 Loadings
•• If a wage or salary earner has to work
in difficult or hazardous conditions,
then the worker may be granted an extra
­payment or loading.
•• Most workers are granted a ­ ‘holiday
loading’. For a 4-week period each year
they are paid an extra 17.5% of their
usual wage.

TOPIC 2 Financial mathematics 41

 WORKED EXAMPLE 11

Rohan works as an electrician and receives $38.20 per hour for a 36-hour working week.
If Rohan works ‘at heights’ he receives $2.50 per hour height loading. Calculate Rohan’s
wage in a week where he works 15 hours at heights.
THINK WRITE
1 Calculate Rohan’s normal weekly wage. Normal wage = 36 × 38.20
= $1375.20
2 Calculate Rohan’s loading for the time he worked Loading = 15 × 2.5
at heights. = $37.50
3 Calculate Rohan’s total wage. Total wage = 1375.20 + 37.50
= $1412.70

WORKED EXAMPLE 12

Jelena works as a hairdresser and is paid a normal rate of $19.70 per hour for a 38-hour
­working week.
a Calculate Jelena’s normal weekly wage.
b For her 4 weeks annual leave, Jelena is paid a loading of 17.5%. Calculate the amount
that Jelena receives in holiday loading.
c Calculate the total amount that Jelena receives for her 4 weeks annual leave.
THINK WRITE
a Calculate Jelena’s normal wage by multiplying the a Normal wage = 38 × 19.70
hours worked by the hourly rate. = $748.60
b 1 Find 17.5% of Jelena’s normal wage. b 17.5% of $748.60 = $131.01
2 Multiply this amount by 4 to find the holiday Holiday loading = 4 × 131.01
loading. = $524.04
c Find the total amount received by multiplying c Holiday pay = 4 × 748.60 + 524.04
Jelena’s ­normal weekly pay by 4 and adding the = $3518.44
­holiday loading.

ACTIVITY: WHY DO WE HAVE LEAVE LOADING?

Use the internet or other resources to research the reasons for inclusion of leave loading provisions in many
awards. Do you think these reasons are valid for today’s work force?

2.6.2 Bonuses
•• Many people who are employed in managerial positions receive a bonus if the company achieves
­certain performance targets. The bonus may be a percentage of their annual salary or a percentage of
the company’s profits.

42 Maths Quest 9 Stage 5 NSW Australian curriculum

 WORKED EXAMPLE 13

Brooke is the Chief Executive Officer of a fashion company on a salary of $240 000 per year.
Brooke will receive a bonus of 1% of her salary for every percentage point that she increases
the company profit. If the company profit grows from $3.1 million to $4.4 million in one year,
­calculate the amount of Brooke’s bonus.
THINK WRITE
1 Calculate the increase in profit. Increase in profit = $4.4 m − $3.1 m
= $1.3 m
1.3
2 Express the increase in profit as a percentage. Percentage increase = × 100%
3.1
= 41.9%
3 Calculate this percentage of Brooke’s annual Bonus = 41.9% of $240 000
salary. = $100 560
4 Write the answer in a sentence. Brooke’s bonus is $100 560.

RESOURCES — ONLINE ONLY

Interactivity: Bonuses (int-6071)

Digital doc: SkillSHEET Expressing one quantity as a percentage of another (doc-10858)

Exercise 2.6 Loadings and bonuses

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1, 3, 4, 7, 9, 10 1, 2, 4, 5, 8–13 1, 2, 4, 6–16

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. WE11 Rashid works as an ­electrician
and receives $35.40 per hour for a
35-hour working week. If Rashid
works at heights he receives a height
loading of $0.32 per hour. Calculate
Rashid’s wage in a week where he
works 18 hours at heights.
2. Patrick is a railway linesman. If he works
in wet weather he is paid a loading of
43 cents per hour. If he normally works a
38-hour working week at $21.02 per hour
and 16 hours are spent working in wet
weather, find Patrick’s pay for the week.

TOPIC 2 Financial mathematics 43

 3. Saci is an industrial cleaner and is paid at the rate of $19.82 per hour. If Saci works in a confined space,
she is paid a loading of $0.58 per hour. Calculate Saci’s pay for a week in which she worked 38 hours and
19 of those hours were in a confined space.
4. WE12 Jordan works as the manager of a supermarket and is paid a normal rate of $37.60 per hour for a
38-hour working week.
a. Calculate Jordan’s normal weekly wage.
b. For her 4 weeks annual leave, Jordan is paid a loading of 17.5%. Calculate the amount that Jordan
receives in holiday loading.
c. Calculate the total amount that Jordan receives for her 4 weeks annual leave.
5. Charlie earns $22.80 per hour for a 38-hour week.
a. Calculate the amount Charlie will earn in a normal working week.
b. Calculate the total amount Charlie will receive for his 4 weeks annual leave if he receives a 17.5%
holiday loading.
6. Liam is paid $15.95 per hour for a 36-hour working week.
a. Calculate Liam’s weekly wage.
b. Liam takes one week’s holiday, for which he is given a 17.5% loading. Calculate the holiday loading.
7. Karen receives an annual salary of $63 212.
a. What is her fortnightly pay?
b. What is she paid for her annual 4-week holiday, for which she receives an extra 17.5% loading?
8. Brian earns $956.46 for a standard 38-hour
week and a $27.53 per week allowance for
working on scaffolding. Calculate his total pay
for a week in which he works on scaffolding
and does 4 hours overtime at time and a half.
9. WE13 Eric is a director of a mining company on
a ­salary of $380 000 per year. Eric is told that
at the end of the year he will receive a bonus of
1% of his salary for every percentage point of
increase in the company profit. If the company
profit grows from $4.9m to $6.4m in one year,
calculate the amount of Eric’s bonus.
Communicating, reasoning and problem solving
10. Sally is the manager of a small bakery that employs 12 people. As an incentive to her workers she
agrees to pay 15% of the business’s profits in Christmas bonuses for her employees. The business
makes a profit of $400 000 during the year.
a. Find the total amount that Sally pays in bonuses.
b. If the bonus is shared equally, what amount does each employee receive as a Christmas bonus?
c. If one employee earns $42 000 per year, calculate the Christmas bonus as a percentage of annual
earnings, correct to 2 decimal places. Explain your answer.
11. Shane, the director of an exercise company, earns a salary of $275 000 a year. Shane gets paid
­incentives if he is able to increase the company’s profit. He gets:
• 5% if he increases the profit by 0.1–10%
• 7.5% if he increases the profit by 10.1–20%
• 10% if he increases the profit by more than 20%.
If the company’s profit grows from $1.2 million to $1.4 million in a year:
a. explain what percentage incentive Shane will get and why
b. calculate his salary for the year.

44 Maths Quest 9 Stage 5 NSW Australian curriculum

12. Kevin owns a sports store and has 7 staff working for him. He offers each of them a 5.5% end-of-year
bonus on any profits over $100 000. This year the store made a profit of $275 000.
a. Find the amount each employee earned in bonuses.
b. What is the cost to Kevin in total bonuses for the year?
c. If one employee earned $64 625 including bonuses for the year, what was their base salary?
13. Jimmy is a high-rise window cleaner.
He gets paid $15 per window for the
first five levels. For the next 15 levels
he gets an extra 15% per window,
and above this he gets 20% extra
as ­danger money. How much does
Jimmy earn for cleaning:
a. a total of 20 windows on levels
3 to 4
b. 10 windows on levels 4 and a total
of 27 windows on levels 10 to 13
c. a total of 30 windows on levels 11
to 14 and a total of 30 windows on
levels 21 to 25?
14. Denise works for a real estate agent. She receives a basic wage of $250 per week plus commission
on sales. The rate of commission is variable. For houses up to $300 000, the commission is 0.5%.
For houses over $300 000, the commission is an additional 0.25% on the amount over $300 000. How
much pay did she receive in the week she sold a house for:
a. $280 000 b. $428 000?
1
15. When Jack goes on holidays, he is paid 17 2% holiday loading in addition to his normal pay. When he
went on 2 weeks’ leave, his holiday pay was $1504. What is his normal weekly pay?
16. How are bonuses used to encourage workers?

2.7 Taxation and net earnings [Stage 5.1]

2.7.1 Taxation
•• In Australia, people who earn more than $18 200 in a financial year must pay a percentage of their
earnings as income tax.
•• The rates of taxation for Australian residents for 2016–17 are shown in the table below.

Taxable income Tax on this income

0–$18 200 Nil
$18 201–$37 000 19c for each $1 over $18 200
$37 001–$87 000 $3572 plus 32.5c for each $1
over $37 000
$87 001–$180 000 $19 822 plus 37c for each $1
over $87 000
$180 001 and over $54 232 plus 45c for each $1
over $180 000
The above rates do not include the Medicare levy
of 2.0%.

TOPIC 2 Financial mathematics 45

 DISCUSSION
Is the current Australian income tax system fair? Take a look at how it has changed over the years, and how tax
systems vary from country to country.

WORKED EXAMPLE 14

Find the amount of tax paid on an annual income of:

a $22 000 b $92 000.

THINK WRITE
a 1 $22 000 is in the $18 201 to $37 000 bracket. a
2 The tax payable is 19c (0.19) for every dollar
over $18 200.
3 Calculate the amount over $18 200 by $22 000 − $18 200 = $3800
­subtracting $18 200 from $22 000.
4 Apply the rule ‘19c for every dollar over Tax payable = 0.19 × 3800
$18 200’. = 722
5 Write the answer in a sentence. The tax payable on $22 000 is $722.
b 1 $92 000 is in the $87 001 to $180 000 bracket. b
2 Calculate the amount over $87 000 by $92 000 − $87 000 = $5 000
­subtracting $87 000 from $92 000.
3 Apply the rule ‘$19 822 plus 37c for each $1 Income tax = 19 822 + 0.37 × 5000
over $87 000’. = 21 672
4 Write the answer in a sentence. c The tax payable on $92 000 is $21 672.

2.7.2 Net earnings

Medicare levy
•• Medicare is the scheme that gives Australian residents access to health care.
•• Most taxpayers pay 2.0% of their taxable income to pay for this scheme. This is called the
Medicare levy.
•• People who have private medical insurance can reclaim some of this money.
Pay As You Go (PAYG) taxation
•• When you receive your pay, usually as a bank deposit, some of the money has been taken out by the
employer to cover your income tax and Medicare levy. This is called ‘pay as you go’ (PAYG) taxation.
•• The initial amount, before tax is taken out, is called your gross salary and the amount that you ­actually
receive is called your net salary.
•• The amount of money to be deducted by the employer each week is published by the Australian Tax
Office, as shown in the following table.
•• Every tax payer is required to submit a yearly tax return. Usually the tax payer’s employer will
have deducted the correct weekly amount from the employee’s gross earnings. If the employee has
received income from another source, such as an interest-bearing bank account, this may mean that
the employee needs to pay tax on this extra amount. Alternatively, if the employee has some extra tax
deductions, this could mean a tax return to the employee.

46 Maths Quest 9 Stage 5 NSW Australian curriculum

 PAYG TABLE: Weekly tax withheld ($)
With tax-free With tax-free With tax-free
Gross wage threshold Gross wage threshold Gross wage threshold
450 22 950 165 1450 339
500 37 1000 183 1500 356
550 48 1050 200 1550 373
600 59 1100 217 1600 390
650 69 1150 235 1650 408
700 80 1200 252 1700 426
750 96 1250 270 1750 446
800 113 1300 287 1800 465
850 130 1350 304 1850 485
900 148 1400 321 1900 504
Note: Most Australian citizens qualify for the tax-free threshold. For the purposes of this section, apply the
tax-free threshold values.
Deductions
•• Often other sums of money,
such as union fees and private
health insurance, are deducted
from gross pay.
Family Tax Benefit
•• When a family has young
or dependent children, the
government may pay an
­
allowance called the ‘Family
­
Tax Benefit’, which is added
to a person’s gross salary.

WORKED EXAMPLE 15

Fiona has a gross wage of $900 per week.

a Use the PAYG table to find the amount of tax
that should be deducted.
b What percentage of her gross pay is deducted?
c If Fiona receives $98 in family allowance but has
deductions of $71 (superannuation) and $5.50
(union fee), what is her net pay?

TOPIC 2 Financial mathematics 47

 THINK WRITE
a From the table, PAYG tax payable on a gross wage of a $148
$900 per week is $148.
148
b Find 148 as a percentage of 900. b × 100 = 16.44% deducted
900
c 1 Fiona receives $98 in family allowance. Add this c Total income = 900 + 98
to her gross weekly wage to find her total income. = $998
2 Calculate her total deductions. Total deductions = 148 + 71 + 5.50
= $224.50
3 Calculate her net pay by subtracting her total Net pay = 998 − 224.50
­deductions from her total income. = $773.50

RESOURCES — ONLINE ONLY

eLesson: Small business (eles-0117)

Exercise 2.7 Taxation and net earnings

Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–10 1–11 1–12

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. WE14 Find the amount of tax paid on an annual income of:
a. $15 000 b. $22 000 c. $44 000 d. $88 000.
2. WE15 In the PAYG tax table, look up the amount of tax that must be deducted from the following
weekly earnings and find this as a percentage of the gross pay, correct to 2 decimal places.
a. $650 b. $1100 c. $1550
3. For each of the following weekly pay values, calculate the net pay.
a. Gross pay $450.00, tax $22.00 and union fees $4.75
b. Gross pay $550.00, tax $48.00, private health insurance $25.85 and superannuation $53.80
c. Gross pay $850.00, tax $130.00, loan repayment $160.00 and insurance payment $45.40
4. Calculate the net annual salary of a person who has a gross annual salary of $57 200 and a family
allowance of $4392.20 with ­deductions of $17 264 for tax, annual union fees of $262.75 and social
club payments of $104.00.
5. Sergio works as a security guard and receives gross pay of $950.00 each week. His tax totals
$165 per week. If his other deductions are $60.10 for superannuation and $5.05 for union fees,
what is his net pay?

48 Maths Quest 9 Stage 5 NSW Australian curriculum

 6. Lieng works as an interior decorator and earns $1350 per week.
a. How much tax should be deducted from her pay each week?
b. What percentage of her gross pay is her tax?
c. If Lieng also has deductions of $105 for superannuation, $5.20 for union fees, and $4.00 for a social
club, what is her net weekly pay?
Communicating, reasoning and problem solving
7. Yelena works as a chef and is paid $22.86
per hour and works a 35-hour week.
a. Calculate Yelena’s gross weekly
earnings.
b. How much tax should be deducted from
Yelena’s pay?
c. What percentage of her gross pay
­(correct to 2 decimal places) is
deducted in tax?
d. If Yelena also has deductions of $56.20
for superannuation and $22.50 for her
health insurance, and she gets $60.00
taken out to pay off her car loan, what
is her net pay?
e. What percentage of her gross pay is her net pay? Give your answer correct to 2 decimal places.
8. Debbie earns $72 000 per year.
a. Explain why she takes home only $57 053.
b. Give reasons why this figure could possibly be different again.
9. Jacko works at an IT firm and earns $1725 a week.
a. How much does he earn a year, gross?
b. How much tax will he need to pay per year? (Use the yearly table to calculate the tax payable.)
c. If he has no deductions, how much will he need to pay for the Medicare levy?
10. Tamara works as a swimming instructor and earns $21.50 per hour when working a 38-hour week.
a. Using the PAYG table, find the amount of tax that should be deducted from Tamara’s salary per
week, correct to the nearest dollar.
b. What percentage of her gross salary is deducted? Give your answer to 1 decimal place.
c. If Tamara receives $82 per week in family allowance but pays $50 per week towards her
­superannuation, what is her net weekly pay?
11. Greg started work as an experienced barista in a café and was paid $24 an hour when working a
40-hour week. His weekly tax withheld was $165. After 6 months, he decided to go travelling. If his
6 months of work was all within one financial year, how much money should Greg expect to receive
in his tax return? (Assume a compulsory Medicare levy of 2%.)
12. What strategies would you use to remember how to calculate income tax?

2.8 Simple interest [Stage 5.1]

2.8.1 The simple interest formula
•• Interest is the fee charged for the use of someone else’s money. It is normally a percentage of the
amount borrowed.
•• Lenders or investors receive interest from banks for lending them money.
•• Borrowers pay interest to banks and other financial institutions.

TOPIC 2 Financial mathematics 49

 •• Simple interest or ‘flat rate’ interest can be calculated using a simple formula: I = PRN
where I = the amount of interest to be paid
P = the principal, which is the amount of money borrowed
R = the interest rate, usually given as a percentage
N = the number of times that the interest must be paid.
•• The abbreviation p.a. stands for ‘per annum’, which means ‘each year’. For example, an interest rate
of 5% p.a. for 4 years means that R = 5% (or 0.05) and N = 4.

WORKED EXAMPLE 16

Zac borrows $3000 for 2 years at 9% p.a. simple interest.

a How much interest is he charged? b What total amount must he repay?

THINK WRITE
a 1 Write the simple interest formula and the a I = PRN, P = 3000, R = 9% = 0.09,
known ­values of the variables. N=2
2 Substitute the values into the formula to I = 3000 × 0.09 × 2
find I. = $540
3 Write the answer in a sentence. Zac is charged $540 interest.
b 1 Repayment = amount borrowed + interest. b 3000 + 540 = 3540
2 Write the answer in a sentence. Zac must repay $3540 in total.

•• Care needs to be taken with examples where the term of the investment is given in months or even in
days. In these examples, the period of the investment needs to be expressed in years.
•• The simple interest formula can also be used to find the principal, the interest rate or the term of the
investment by substituting the known values into the formula and solving the resulting equation.

WORKED EXAMPLE 17

Anthony invested $1000 at a simple interest rate of 4.6% p.a. For how long must he invest
it in order to earn at least $100 in interest?
THINK WRITE
1 Write the formula and the known values of the I = PRN, where I = 100, P = 1000, R = 4.6%
variables. = 0.046
2 Substitute the given values into the formula. 100 = 1000 × 0.046 × N
3 Solve the equation. 100 = 46N
100
N=
46
≈ 2.1739
4 Change the decimal part of the years into months. 0.1739 × 12 = 2.09 months
5 Write the answer in a sentence using years and Anthony must invest for 2 years and
months. 2 months.

50 Maths Quest 9 Stage 5 NSW Australian curriculum

• The same method is used when R or P are to be found.

WORKED EXAMPLE 18

The Smiths need to buy a new refrigerator at a cost of $1679.

They will pay a deposit of $200 and borrow the balance at an
interest rate of 19.5% p.a. The loan will be paid off with
24 equal monthly payments.
a How much money do the Smiths need to borrow?
b What is the term of the loan?
c How much interest will they pay?
d What will be the total cost of the refrigerator?
e How much is each payment?

THINK WRITE
a 1 Subtract the deposit from the cost to find the a 1679 − 200 = 1479
amount still owing.
2 Write the answer in a sentence. They must borrow $1479.
b The term is 24 months as this is the length of time b 24 months is 2 years. The term is
between borrowing and paying back. The interest 2 years.
rate is per year.
19.5
c 1 Identify the principal (P), interest rate (R) and c P = 1479, R = = 0.195, N = 2
100
time period (N), and use the formula.
I = PRN
= 1479 × 0.195 × 2
= 576.81
2 Write the answer in a sentence. The interest will be $576.81.
d Add the interest to the initial cost. d 1679.00 + 576.81 = 2255.81
The total cost will be $2255.81.
e 1 Subtract the deposit from the total cost to find e 2255.81 − 200 = 2055.81
the amount to be repaid.
2 Divide the total payment into 24 equal payments. 2055.81 ÷ 24 = 85.66
Each repayment will be $85.66.

• Spreadsheets are often used to make simple interest calculations easier.

TOPIC 2 Financial mathematics 51

2.8.2 Developing a simple interest spreadsheet
•• The spreadsheet below calculates the total amount of simple interest for a given number of years.

A B C D E F

2 Principal 1000

3 Interest rate (per year)    5

4 Time (years)    6

6 Year Principal Interest New value

7 1 1000 50 1050

8 2 1000 50 1100

9 3 1000 50 1150

10 4 1000 50 1200

11 5 1000 50 1250

12 6 1000 50 1300

13

•• Inputs (yellow cells):

–– Cell D2: the amount of principal. Above, the principal is $1000.
–– Cell D3: the interest rate, as a percentage. Above, the interest rate is 5%.
–– Cell D4: the term. Above, the term is 6 years.
•• Outputs (Row 7 and beyond):
–– Column B: shows the years: 1, 2, 3, … 6
–– Column C: shows the principal each year. Set C7 = $D$2 and fill down.
–– Column D: shows the interest calculation. Set D7 = C7*$D$3/100 and fill down.
–– Cell E7: shows the new value after year 1. Set E7 = C7 + D7.
–– Cell E8: shows the new value after year 2. Set E8 = E7 + D8 and fill down.
•• For time periods greater than 6 years, highlight Row 12’s cells and fill down.

RESOURCES — ONLINE ONLY

Interactivity: Simple interest (int-6074)

Interactivity: Effects of P, R, I and t (int-0745)
Digital doc: WorkSHEET Simple interest (doc-6246)

52 Maths Quest 9 Stage 5 NSW Australian curriculum

Exercise 2.8 Simple interest
Individual pathways

UU PRACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–10 1–11 1–19

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. WE16 Monique borrows $5000 for 3 years at 8% per annum simple interest.
a. How much interest is she charged?
b. What total amount must she repay?
2. Calculate the simple interest earned on an investment of $15 000 at 5.2% p.a. over 30 months.
3. For each loan in the table, calculate:
i. the simple interest ii. the amount repaid.

Principal ($) Interest rate per annum Time

a 1000 5% 2 years

b 4000 16% 3 years

c 8000 4.5% 48 months

d 2700 3.9% 2 years 6 months

e 15 678 9.2% 42 months

4. Find the final value of each of the following investments.

a. $3000 for 2 years at 5% p.a. b. $5000 for 3 years at 4.3% p.a.
5. Hasim borrows $14 950 to buy a used car. The bank charges a 9.8% p.a. flat rate of interest over
60 months.
a. What total amount must he repay?
b. How much is each equal monthly repayment?
6. Carla borrows $5200 for an overseas trip at
8.9% p.a. simple interest over 30 months.
If ­repayment is made in equal monthly
­instalments, how much is each instalment?
7. WE17 Michael invested $2000 at a ­simple
interest rate of 4% p.a. For how long
must he invest it in order to earn $200
in interest?
8. If Jodie can invest her money at 8% p.a.,
how much does she need to invest to earn
$2000 in 2 years?
9. If the simple interest charged on a loan
of $9800 over 3 years is $2352, what
­percentage rate of interest was charged?

TOPIC 2 Financial mathematics 53

10. Find the missing quantity in each row of the table.
Principal Rate of interest p.a. Time Interest earned
a $2000 6% $240.00
b $3760 5.8% $545.20
c 7% 3 years $126.00
d 4.9% 1 year 9 months $385.88
e $10 000 1 12 years $1200.00
f $8500 42 months $1041.25

11. WE18Mika is buying a used car priced at $19 998. He has a deposit of $3000 and will pay the ­balance
in equal monthly payments over 4 years. The simple ­interest rate will be 12.9% p.a.
a. How much money is he borrowing?
b. How much interest will he pay?
c. What will be the total cost of the car?
d. How many payments will he make?
e. How much is each payment?
12. A new sound system costs $3500, but it can be purchased for no deposit, followed by 48 equal
monthly payments, at a simple interest rate of 16.2% p.a.
a. What will be the total cost of the sound system?
b. Under a ‘no deposit, no payment for 2 years’ scheme, 48 payments are still required, but the first
payment isn’t made for two years. (This will stretch the loan over 6 years.) How much will the
­system cost using this scheme?
c. What will be the monthly payment under each of the schemes above?
Communicating, reasoning and problem solving
13. A $269 000 business is purchased on $89 000 deposit with the balance payable over 5 years at
8.95% p.a. flat rate.
a. How much money is borrowed to purchase this business?
b. How much interest is charged?
c. What total amount must be repaid?
d. Find the size of each of the equal monthly repayments and explain two ways in which these
­payments could be reduced.
14. If a bank offers interest on its savings account of 4.2% p.a. and the investment is invested for
9 months, explain why 4.2 is not substituted into the simple interest formula as the interest rate.
15. A Year 9 girl is paid $79.50 in interest for an original investment of $500 for 3 years. What is the
annual interest rate?
16. A loan is an investment in reverse: you borrow money from a bank and are charged interest. The value
of a loan becomes its total cost.
A worker wishes to borrow $10 000 from a bank that charges 11.5% interest per year. If the loan is
over 2 years:
a. calculate the total interest paid b. calculate the total cost of the loan.
17. For the following questions, assume that the interest charged on a home loan is simple interest.
a. Tex and Molly purchase their first home and arrange for a home loan of $375 000. Their home loan
interest rate rises 0.25% per annum within the first 6 months of the loan. Determine the monthly
increase, in dollars, of their repayments.
b. Brad and Angel’s interest on their home loan is also increased by 0.25% per annum. Their monthly
repayments increase by $60. Determine the amount of their loan, in dollars.

54 Maths Quest 9 Stage 5 NSW Australian curriculum

18. a. Theresa invests $4500 at 5.72% per annum in an account that attracts simple interest for 6 months.
Show that at the end of 6 months she should expect to have $4628.70.
b. Barry has $6273 in his bank account at a simple interest rate of 4.86% per annum. After 39 days
he calculates that he will have $6305.57 in his account. Did Barry calculate his interest ­correctly?
Justify your answer by showing your calculations.
c. Juanita receives $10 984 for the sale of her car. She invests x% of $10 984 in an account at 6.68% per
annum simple interest for 1 12 years. She spends the remainder of the money from the sale of her car.
At the end of the investment she has exactly enough money to purchase a car for $11 002. Find the
value of x, correct to 2 decimal places.
19. How does interest affect the way we live?

2.9 Compound interest [Stage 5.1]

2.9.1 Compound interest
•• Consider $1000 invested for 3 years at 10% p.a. simple interest.
•• Each year the value of the investment increases by $100, reaching a total value of $1300.
•• The simple interest process can be summarised in the following table.
Principal Interest Total value
Year 1 $1000 $100 $1100
Year 2 $1000 $100 $1200
Year 3 $1000 $100 $1300
Total interest = $300
•• Under the system called compound interest, the interest is added to the principal at the end of each
year; in other words, it is compounded annually.
•• The compound interest process can be summarised in this table.
Principal Interest Total value
Year 1 $1000 $100 $1100
Year 2 $1100 $110 $1210
Year 3 $1210 $121 $1331
Total interest = $331
•• The principal grows each year and so does the interest.
•• Over many years, the difference between simple interest and compound interest can become enormous.

WORKED EXAMPLE 19

Complete the table to find the interest paid when $5000 is invested at 11% p.a. compounded
annually for 3 years.
Principal Interest Total value
Year 1 $5000
Year 2
Year 3
Total interest =

TOPIC 2 Financial mathematics 55

 THINK WRITE
11
1 Interest for year 1 = 11% of $5000 11% = = 0.11
100
Find the principal for year 2 by adding I = 0.11 × 5000 = 550
the interest to the year 1 principal. 5000 + 550 = 5550
2 Interest for year 2 = 11% of $5550 0.11 × 5550 = 610.50
Find the total value at the end of year 2. 5550 + 610.50 = 6160.50
This is the principal for year 3.
3 Interest for year 3 = 11% of $6160.50 0.11 × 6160.50 = 677.66
6160.50 + 677.66 = 6838.16
4 Calculate the interest earned over 3 years 6838.16 − 5000 = 1838.16
by subtracting the year 1 ­principal from
the final amount. Principal Interest Total value

Year 1 $5000 $550 $5550

Year 2 $5550 $610.50 $6160.50

Year 3 $6160.50 $677.66 $6838.16

Total interest = $1838.16

•• There is a quicker way of finding the total value of the investment. Look again at Worked e­ xample 19.

(100 )
111
The investment grows by 11% each year, so its value at the end of the year is 111% = 1.11 of
its value at the start of the year.
111% of 5000
= 1.11 × 5000
= 5550
•• This process is repeated each year for 3 years. The multiplying factor is 1.11.
×1.11 ×1.11 ×1.11
5000 → 5550 → 6160.50 → 6838.16
•• After 3 years the value of the investment is $6838.16.

WORKED EXAMPLE 20

Complete the table to find the value, after 4 years, of an investment of $2000 compounded
annually at 8% p.a.

Year Start of year End of year

Year 1 $2000

Year 2

Year 3

Year 4

56 Maths Quest 9 Stage 5 NSW Australian curriculum

THINK WRITE
108
1 Interest is compounded at 8%, so at the end 108% = = 1.08
100
of the first year the value is 108% of the
initial value. 1.08 × 2000 = 2160

2 For the value at the end of year 2, calculate 1.08 × 2160 = 2332.80
108% of the amount accumulated in year 1,
so find 108% of 2160.
3 For the value at the end of year 3, calculate 1.08 × 2332.80 = 2519.424
108% of the amount accumulated in year 2,
so find 108% of 2332.80.
4 For the value at the end of year 4, calculate 1.08 × 2519.424 = 2720.98
108% of the amount accumulated in year 3,
so find 108% of 2519.424.
5 Complete the table.
Year Start of year End of year
Year 1 $2000 $2160
Year 2 $2160 $2332.80
Year 3 $2332.80 $2519.42
Year 4 $2519.42 $2720.98

•• In Worked example 20 the principal ($2000) was multiplied by 108% four times (because there were
4 years). The final amount, A, is $2720.98.
•• If the principal ($2000) was invested for the same period of time at a flat rate of interest, the final
amount would be:
2000 × 8 × 4
A = 2000 +
100
= $2640
•• A compound interest rate over the same period of time returned an extra $80.98 in interest.
•• It is always important when borrowing or investing money to compare terms and hence ensure the
most beneficial investment or loan.

WORKED EXAMPLE 21

a Calculate the amount of interest earned if $40 000 is invested at 7.5% p.a. compounding
­annually for 6 years.
b Calculate the amount of interest earned if $40 000 is invested at a flat rate of 7.5% p.a.
for 6 years.
c Which is the better investment and by how much?
THINK WRITE
107.5
a 1 Interest is compounded at 7.5%, so at a 107.5% = = 1.075
100
the end of the first year the value is
107.5% of the initial value. 1.075 × 40 000 = 43 000
The multiplying factor is 1.075.

TOPIC 2 Financial mathematics 57

 2 For the value at the end of year 2, calculate 1.075 × 43 000 = 46 225
107.5% of the amount accumulated in year 1,
so multiply 1.075 by 43 000.
3 For the value at the end of year 6, continue 46 225 × 1.075 × 1.075 × 1.075 × 1.075 =
to multiple each successive value by 1.075 $61 732.06
(so multiply another 4 times).
4 To calculate the interest, subtract the amount 61 732.06 – 40 000 = $21 732.06
invested from the total value.
5 Write the answer in a sentence. The compound interest earned is $21 732.06
PRT
b 1 Use the simple interest formula. b SI =
100
40 000 × 7.5 × 6
=
100
= 18 000
2 Write the answer in a sentence. The simple interest earned is $18 000.
c 1 Compare the two amounts of interest earned c 21 732.06 – 18 000 = 3732.06
2 Write the answer in a sentence. The investment in part a is the better option.
Over the same time period, the interest
earned is greater by $3732.06.

ACTIVITY: CONSIDER YOUR OPTIONS

Nicky has $15 000 to invest for 5 years.
She considers the following options.
a. A Bankco term deposit at 5.25% p.a. compounded annually
b. A Wecare term deposit paying an interest rate of 5.08% p.a. compounded quarterly
c. A building society paying a return of 5.4% p.a. compounded monthly
d. A business venture with a guaranteed return of 7.3% p.a. compounded daily
e. A flat interest rate of 8.2% p.a.
All of the investments are equally secure.
Using a spreadsheet, prepare a report to advise Nicky which would be the best option.

RESOURCES — ONLINE ONLY

Digital doc: SpreadSHEET Simple and compound interest (doc-10907)

Exercise 2.9 Compound interest

Individual pathways

UU PR ACTISE UU CONSOLIDATE UU MASTER

Questions: Questions: Questions:
1–10 1–11 1–15

To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.

58 Maths Quest 9 Stage 5 NSW Australian curriculum

Understanding and fluency
1. WE19 Complete the tables to find the interest paid when:
a. $1000 is invested at 12% p.a. compounded annually
for 3 years

Principal Interest Total value

Year 1 $1000
Year 2
Year 3
Total interest =
b. $100  000 is invested at 9% p.a. compounded ­annually
for 4 years.

Principal Interest Total value

Year 1 $100  000
Year 2
Year 3
Year 4
Total interest =

2. WE20 Complete the tables to find the final value of each investment.
a. $5000 invested at 12% p.a. compounded annually for 3 years

Start of year End of year

Year 1 $5000
Year 2
Year 3

b. $200 000 invested at 7% p.a. compounded annually for 3 years

Start of year End of year

Year 1 $200 000
Year 2
Year 3

c. $100 000 invested at 8.5% p.a. compounded annually for 5 years

Start of year End of year

Year 1 $100 000
Year 2
Year 3
Year 4
Year 5

TOPIC 2 Financial mathematics 59

 d. $12 000 invested at 15% p.a. compounded annually for 4 years
Start of year End of year
Year 1 $12 000
Year 2
Year 3
Year 4

3. WE21 For each of the following investments, use the multiplying factor to find:

i. the total value

ii. the amount of interest paid.
a. $8000 is invested for 8 years at 15% p.a. interest compounding annually.
b. $50 000 is invested for 4 years at 6% p.a. interest compounding annually.
c. $72 000 is invested for 3 years at 7.8% p.a. interest compounding annually.
d. $150 000 is invested for 7 years at 6.3% p.a. interest compounding annually.
4. Peter invests $5000 for 3 years at 6% p.a. simple interest, and Maria invests the same amount for 3
years at 5.8% p.a. compounding annually.
a. Calculate the value of Peter’s investment on maturity.
b. Calculate the value of Maria’s investment on maturity.
c. Explain why Maria’s investment is worth more, although she received a lower interest rate.
5. Gianni invests $8000 at 15% p.a. compounded ­annually, and Dylan invests $8000 at 15% p.a. flat rate.
How much more than Dylan’s investment will Gianni’s investment be worth after:
a. 1 year b. 2 years c. 5 years?
6. When her granddaughter was born, Barbara invested $100
at the rate of 7% p.a. compounding ­annually. She plans to
give it to her granddaughter on her ­eighteenth birthday. Use
a spreadsheet to determine the value of the investment on
her eighteenth birthday.
7. Chris and Jenny each invested $10 000. Chris invested at
6.5% p.a. compounding annually, and Jenny took a flat rate
of interest. After 5 years, their investments had equal value.
a. Find the value of Chris’s investment after 5 years.
b. Find Jenny’s interest rate.
c. Find the value of each investment after 6 years.
Communicating, reasoning and problem solving
8. Two investment options are available to invest $3000.
A. Invest for 5 years at 5% p.a. compounding monthly.
B. Invest for 5 years at 5% p.a. compounding weekly.
Explain which option you would you choose and why.
9. There are 3 factors that affect the value of a compound
interest investment: the principal, the ­interest rate and the
length of the investment.
a. Let the interest rate be 10% p.a. and the length of the
investment be 2 years. Calculate the value of an investment of:
i. $1000 ii. $2000 iii. $4000.
b. Comment on the effect of increasing the principal on the value of the investment.
c. Let the principal be $1000 and the interest rate be 10% p.a. Calculate the value of an investment of:
i. 2 years ii. 4 years iii. 8 years.

60 Maths Quest 9 Stage 5 NSW Australian curriculum

 d. Comment on the effect of increasing the length of the investment on the value of the investment.
e. Let the principal be $1000 and the length of the investment be 5 years. Calculate the value of
an investment of:
i. 6% interest p.a. ii. 8% interest p.a. iii. 10% interest p.a.
f. Comment on the effect of increasing the interest rate on the value of the investment.
10. Calculate the value of each of the following investments if the principal is $1000.
a. Interest rate = 8% p.a., compounding period = 1 year, time = 2 years
b. Interest rate = 8% p.a., compounding period = 6 months, time = 2 years
c. Interest rate = 8% p.a., compounding period = 3 months, time = 2 years
11. A bank offers a term deposit for 3 years at an interest rate of 8% p.a. with a compounding period of
6 months. What would be the end value of a $5000 investment under these conditions?
12. A building society offers term deposits at 9%, compounded annually. A credit union offers term
deposits at 10% but with simple interest only.
a. After 2 years, which has the larger value?
b. After 3 years, which has the larger value?
c. How many years does it take for the compound interest offer to have the greater value?
13. One aspect of compound interest is of great importance to investors: how long does it take to ­double
my money? Consider a principal of $100 and an annual interest rate of 10% (compounding annually).
a. How long does it take for this investment to be worth $200?
b. How long would it take for the investment to be worth $400 (a second doubling)?
14. Which would be better, and by what percentage — a wage rise of 20% or two successive wage rises
of 10%?
15. Is compound interest ‘fairer’ than simple interest?

2.10 Review
Investigation | Rich task
Australian currency
Australia’s coins have distinctive features and our notes are
unique in colour and texture. Since decimal currency was
­introduced in Australia in 1966, our notes and coins have
­undergone many changes. Only our five-, ten- and twenty-cent
coins are still minted as they were back then. The one- and
two-cent coins are no longer in circulation, the fifty-cent coin
is a different shape, the one- and two-dollar notes have been
replaced by coins, and our notes have changed from paper to
a special type of plastic.
Note: Answer the following questions on a separate sheet
of paper.
Coins have two sides: an obverse side and a reverse side.
The obverse side of all Australian coins depicts our ­reigning
monarch, Queen Elizabeth II, and the year in which the coin
was minted. The reverse side depicts a typical Australian
feature and sometimes a special ­commemorative event.
1. What is depicted on the reverse side of each Australian coin?

TOPIC 2 Financial mathematics 61

 The table below includes information on Australia’s current coins in circulation. Use the table
to answer questions 2 to 4.
Coin Diameter (mm) Mass (g) Composition
Five-cent 19.41 2.83 75% copper, 25% nickel
Ten-cent 23.60 5.65 75% copper, 25% nickel
Twenty-cent 28.52 11.30 75% copper, 25% nickel
Fifty-cent 31.51 15.55 75% copper, 25% nickel
One-dollar 25.00 9.00 92% copper, 6% aluminium, 2% nickel
Two-dollar 20.50 6.60 92% copper, 6% aluminium, 2% nickel
2. What are the metal compositions of each of the coins?
3. Which is the heaviest coin and which is the lightest? List the coins in order from lightest to heaviest.
4. Which has the smaller diameter — the five-cent coin or the two-dollar coin? Indicate the
­difference in size.
The table below displays information on Australia’s current notes in circulation. The ­column
on the far right compares the average life of the previously used paper notes with that of the
current plastic notes. Use the table to answer questions 5 to 9.
Average life of notes (months)
Note Date of issue Size (mm) Plastic Paper
Five-dollar 07/07/1992 130 × 65 40 6
24/04/1995
01/01/2001
01/09/2016
Ten-dollar 01/11/1993 137 × 65 40 8
Twenty-dollar 31/10/1994 144 × 65 50 10
Fifty-dollar 04/10/1995 151 × 65 About 100 24
One-hundred-dollar 15/05/1996 158 × 65 About 450 104
5. What denominations of notes are available in our Australian currency?
6. On what date was Australia’s first plastic note issued and what was the denomination of the note?
7. Suggest reasons for the four issue dates for the five-dollar note.
8. Why do you think each note is of a different size?
9. The table clearly shows that the plastic notes last about five times as long as the paper notes we
once used. Why do you think the fifty-dollar and one-hundred-dollar notes last longer than the
five- and ten-dollar notes?

RESOURCES — ONLINE ONLY

Digital doc: Investigation — Australian currency (doc-11904)

Digital doc: Code puzzle — What are the smallest and largest muscles in the human body? (doc-11905)
Digital doc: Summary Topic 2 (doc-22884)
Interactivity: Crossword Topic 2 (int-2700)
Interactivity: Word search Topic 2 (int-2699)
Interactivity: Sudoku Topic 2 (int-3210)

62 Maths Quest 9 Stage 5 NSW Australian curriculum

Exercise 2.10 Review questions
To answer questions online and to receive immediate feedback and fully worked solutions for every
­question, go to your learnON title at www.jacplus.com.au. Note: Question numbers may vary slightly.
Understanding and fluency
1. Jane earns an annual salary of $45 650. Calculate her fortnightly pay.
2. Express $638.96 per week as an annual salary.
3. Frank works as a casual shop assistant and is paid $8.20 an hour from 3.30 pm to 5.30 pm, Monday to
Friday, and $9.50 an hour from 7 am to 12 noon on Saturday. What is his total pay for the week?
4. Below are the pay details for 4 people. Who receives the most money?
a. Billy receives $18.50 per hour for a 40-hour working week.
b. Jasmine is on an annual salary of $38 400.
c. Mladin receives $1476.90 per fortnight.
d. Thuy receives $3205 per month.
5. Daniel earns $10 an hour for a regular 38-hour week. If he works overtime, he is paid double time.
How much would he earn if he worked 42 hours in one week?
6. Bjorn earns $468.75 per week award wage for a 38-hour week.
a. What is his standard hourly rate?
b. If he is paid time and a half for normal overtime, what is his pay for a week in which he works
41 hours?
7. Xana makes gift cards as a hobby and is paid 55 cents for each card.
a. How much would she earn if she made 50 cards?
b. How many cards would she need to make to earn $44?
8. Kim sells cakes to the local shop. The shop pays for the ingredients. Kim is paid $3.20 for each cake
that she makes and 50 cents for each slice. If Kim makes 5 cakes and 15 slices one week, how much
does she earn?
9. A salesperson earns a $250 per week retainer, plus 2% commission on the first $10 000 sale
and 1.5% on the remainder. What is their total income for a week in which sales to the value of
$18 000 were made?
10. Jennifer is to start a new job selling mobile phones. She is paid commission only at the rate of 17.5% of
sales. What value of sales must she make in order to receive commission of $600 in one week?
Communicating, reasoning and problem solving
11. Phillipa is paid an annual salary of $48 800.
a. Calculate Phillipa’s gross weekly salary.
b. Calculate the total amount Phillipa will receive for her 4 weeks annual leave if she is paid a 17.5%
holiday loading.
12. The annual cost of operating the rail system in Sydney is $300 million. The Chief Executive Officer of
the rail network is promised a bonus of 0.15% of any saving that she can make to the running of the
system. Calculate the bonus paid if the cost is reduced to $275 million.
13. Geoff works as a waiter and is paid $12.50 per hour. If he works 40 hours per week, calculate:
a. Geoff’s gross pay
b. the tax that Geoff should pay
c. the percentage of gross pay that Geoff pays in tax
d. Geoff’s net pay if he also has $5.35 deducted for union fees and $100.00 for a loan repayment.
14. a. Find the simple interest on an investment of $4000 for 9 months at 4.9% per annum.
b. To what amount will the investment grow by the end of its term?
15. Calculate the monthly instalment needed to repay a loan of $12 500 over 40 months at 9.75% p.a.
simple interest.

TOPIC 2 Financial mathematics 63

16. A simple interest loan of $5000 over 4 years incurred interest of $2300. What interest rate was
charged?
17. Daniela is going to invest $16 000 for 2 years at 9% p.a. with interest compounded annually.
Calculate:
a. the value of the investment
b. the amount of interest earned.
18. Calculate 3.5% of 900.
19. Rearrange the formula I = PRN to make N the subject.
20. Milos works in a supermarket and earns $11.70 per hour. If Milos works Saturday he is paid at time
and a half. State the hourly rate for which Milos works on Saturday.
21. MC Frank invests $1000 at 5% p.a. for three years with interest compounded annually. Which of the
following calculations will correctly find the value of Frank’s investment?
a. $1000 × 5 × 3
b. $1000 × 1.05 × 3
c. $1000 × 1.05 × 1.05 × 1.05
d. $1000 × 1.05 × 1.05 × 1.05 – $1000

64 Maths Quest 9 Stage 5 NSW Australian curriculum

Answers
Topic 2 Financial mathematics
Exercise 2.2 Salaries and wages
1. a. $1105.42 b. $2210.85 c. $4790.17
2. a. $1198.08 b. $2396.15 c. $5191.67
3. a. $19 136 b. $46 410 c. $68 684.20
4. a. $25 870 b. $42 183.96 c. $100 498.06
5. a. $3890 per month b. $3200.68 per fortnight
6. a. $19.75/h b. $12.17/h c. $25.73/h d. $39.06/h
7. a. $459.04 b. $211.66
8. $210.72
9. $261.49
10. Rob earns more.
11. $30.77/h
12. Job A
13. 38 hours
14. a. $1605.77 b. $2788.81 c. $1100 d. $8770
15. B
16. Minh
17. $40 per hour
18. $1735.95, $1833.75
19. a. $29.81 b. $25.64 c. $72 080.58
20. It would depend on the terms and conditions of the position.
21. 12 weeks

Exercise 2.3 Special rates

1. a. $23.94 b. $47.80 c. $43.50
2. a. $906.10 b. $794.33 c. $833.56
3. a. $25.16 b. $113.22 c. $1069.30
4. a. $170.40 b. $340.80 c. $426.00
5. $1156.96
6. a. $30.20 b. $45.30 c. $60.40 d. $135.90
7. a. $32.93 b. $197.55
8. a. $11.70 b. $15.60 c. $19.50
9. 8, 8, 8, 8, 6
10. Pay slip for: Susan WHITE Week ending 17 August
Normal hours 38
Normal pay rate $25.60
Overtime hours 0
Overtime pay rate $38.40
Total pay $972.80

11. Day Pay rate Start time Finish time Hours worked
Monday Normal 9.00 am 5.00 pm 8
Tuesday Normal 9.00 am 5.00 pm 8
Wednesday Normal —
Thursday Normal 1.00 pm 9.00 pm 8
Friday Normal —
Saturday Time and a half 8.00 am 12.00 pm 4

TOPIC 2 Financial mathematics 65

12. Pay slip for: Jason RUDD Week ending 21 December
Normal hours 24
Normal pay rate $10.90
Overtime hours 4
Overtime pay rate $16.35
Total pay $327.00

13. Day Pay rate Start time Finish time Hours worked
Monday Normal 7.00 am 3.00 pm 8
Tuesday Normal 7.00 am 3.00 pm 8
Wednesday
Thursday
Friday Normal 11.00 pm 7.00 am 8
Saturday Time and a half 11.00 pm 7.00 am 8
Sunday Double time 11.00 pm 7.00 am 8

14. Pay slip for: Brett SIMPSON Week ending 15 September

Normal hours 24
Normal pay rate $16.80
Time-and-a-half hours 8
Time-and-a-half pay rate $25.20
Double time hours 8
Double time pay rate $33.60
Gross pay $873.60

15. a. $754.40 b. $1042.80 c. $1347.42

16. a. $232.02 b. $1211.66
17. B
18. No. Glen should have been paid $1034.
19. $1155
20. Hours worked Regular pay Overtime pay Total pay
a 32 $464 $0 $464
b 38.5 $522 $54.38 $576.38
c 40.5 $522 $101.50 $623.50
d 47.2 $522 $295.80 $817.80

21. a. Stewart $930.75, Helen $1108.80

b.    i. 85 hours
ii. No, because she would have worked 92.5 hours, which is 22.5 hours over the required 70 hours per fortnight.
c. $894.94
22. It would be preferable to be paid using a time sheet if the hourly rate was not very high but the job had much potential for
over time.

Exercise 2.4 Piecework

1. $97.50 2. $89.50 3. $175.50 4. $318.75
5. a. $144.00 b. 28 c. $21.60
6. a. $144 b. $218 c. $465
7. a. $107.50 b. 24 c. $7.17
8. a. $52 b. $9.45
9. a. $1398.25 b. $1568.12
10. $422.40
11. a. $8950 b. $3550
12. Answers may vary. Advantages could include flexible hours or working from home; disadvantages could be that time per item
is often at a very low hourly rate.

66 Maths Quest 9 Stage 5 NSW Australian curriculum

Exercise 2.5 Commissions and royalties
1. $3000
2. a. $1280 b. $1115.60
3. $1425
4. a. $200 b. $4400
5. a. $290 b. $482.50 c. $1191.12
6. a. $500 b. $590 c. $1175 d. $1568.75
7. $9800
8. $12 800
9. a. $4800 b. $5400 c. $14 400
10. a. $2400 b. $3750 c. $15 937.50
11. a. Veronica earns $736; Francis earns $504. b. $20 000
12. a. $900 b. $1148 c. $1253.60
13. a. $1520 b. $2237.50 c. $2555 d. $7560
14. $3676.50
15. a. $15 460 b. $48 725 c. $36 456 d. $119 800
16. 4.5%
17. Answers may vary. One advantage is that hard work and a successful product or great selling skills will generate more
money; one disadvantage is that other factors may influence the success of the product and your income may not reflect
your work ethic.
Exercise 2.6 Loadings and bonuses
1. $1244.76 2. $805.64 3. $764.18
4. a. $1428.80 b. $1000.16 c. $6715.36
5. a. $866.40 b. $4072.08
6. a. $574.20 b. $100.49
7. a. $2431.23 b. $5713.39
8. $1135.01 9. $116 326.53
10. a. $60 000 b. $5000 c. 11.90%
11. a. Shane receives a 7.5% incentive as the company’s profit has grown by 16.7% (which is between 10.1% and 20%).
b. $295 625
12. a. $9625 b. $67 375 c. $55 000
13. a. $300 b. $615.75 c. $1057.50
14. a. $1650 b. $2070
15. $640
16. Answers may vary but could include that awarding bonuses encourages employees to work over and above their
expected output.
Exercise 2.7 Taxation and net earnings
1. a. 0 b. $722 c. $5847 d. $20 192
2. a. $69, 10.62% b. $217, 19.73% c. $373, 24.06%
3. a. $423.25 b. $422.35 c. $514.60
4. $43 961.45 5. $719.85
6. a. $304 b. 22.52% c. $931.80
7. a. $800.10 b. $113 c. 14.12% d. $548.40 e. 68.54%
8. a. Debbie is taxed $14 947 on the $72 000 she earns.
b. There may be other deductions on Debbie’s net pay, such as superannuation, union fees, private health insurance and the
Medicare levy.
9. a. $89 700 b. $20 821 c. $1794
10. a. $113 b. 13.8% c. $736
11. $2506.40
12. When calculating income tax, refer to given information such as tables and determine if the tax is to be calculated before or
after deductions.

TOPIC 2 Financial mathematics 67

Exercise 2.8 Simple interest
1. a. $1200 b. $6200
2. $1950
3. a. i. $100 ii. $1100 b. i. $1920 ii. $5920
c. i. $1440 ii. $9440 d. i. $263.25 ii. $2963.25
e. i. $5048.32 ii. $20 726.32
4. a. $3300 b. $5645 5. a. $22 275.50 b. $371.26
6. $211.90 7. 2.5 years 8. $12 500 9. 8%
10. a. 2 years b. 2.5 years c. $600 d. $4500.06 e. 8% f. 3.5%
11. a. $16 998 b. $8770.97 c. $28 768.97 d. 48 e. $536.85
12. a. $5768 b. $6902 c. $120.17, $143.79
13. a. $180 000 b. $80 550 c. $260 550 d. $4342.50
14. The interest rate in the simple interest formula needs to be converted from a percentage into a decimal: 4.2% = 0.042.
15. 5.3%
16. a. $2300 b. $12 300 17. a. $78.13 b. $288 000
18. a. Answers will vary. b. Yes c. 91.04
19. Answers may vary but could include that interest can affect the cost of housing and hence standard of living.

Exercise 2.9 Compound interest

1. a. Principal Interest Total value
Year 1 $1000 $120 $1120
Year 2 $1120 $134.40 $1254.40
Year 3 $1254.40 $150.53 $1404.93
Total interest = $404.93
b. Principal Interest Total value
Year 1 $100 000 $9000 $109 000
Year 2 $109 000 $9810 $118 810
Year 3 $118 810 $10 692.90 $129 502.90
Year 4 $129 502.90 $11 655.26 $141 158.16
Total interest = $41 158.16

2. a. Start of year End of year

Year 1 $5000 $5600
Year 2 $5600 $6272
Year 3 $6272 $7024.64
b. Start of year End of year
Year 1 $200 000 $214 000
Year 2 $214 000 $228 980
Year 3 $228 980 $245 008.60
c.
Start of year End of year
Year 1 $100 000 $108 500
Year 2 $108 500 $117 722.50
Year 3 $117 722.50 $127 728.91
Year 4 $127 728.91 $138 585.87
Year 5 $138 585.87 $150 365.67

d. Start of year End of year

Year 1 $12 000 $13 800
Year 2 $13 800 $15 870
Year 3 $15 870 $18 250.50
Year 4 $18 250.50 $20 988.08

68 Maths Quest 9 Stage 5 NSW Australian curriculum

3. a. i. $24 472.18 ii. $16 472.18 b. i. $63 123.85 ii. $13 123.85
c. i. $90 196.31 ii. $18 196.31 d. i. $230 050.99 ii. $80 050.99
4. a. $5900 b. $5921.44      
c. Each year, Maria’s principal increases.
5. a. 0 b. $180 c. $2090.86
6. $337.99
7. a. $13 700.87 b. 7.4%      c. Chris, $14 591.42; Jenny, $14 440
8. Option B would be the best choice, as the shorter the time between the compounding periods, the greater the interest paid.
9. a. i. $1210 ii. $2420 iii. $4840
b. Increasing the principal will increase the value of the investment because it will have a higher value of interest.
c. i. $1210 ii. $1464.10 iii. $2143.59
d. Increasing the length of the investment will increase the value of the investment because it will have a higher value
of interest.
e. i. $1338.23 ii. $1469.33 iii. $1610.51
f. Increasing the interest rate will increase the value of the investment because it will have a higher value of interest.
10. a. $1166.40 b. $1169.86 c. $1171.66
11. $6326.60
12. a. Simple interest b. Simple interest c. 4 years
13. a. 7.27 years b. 14.55 years
14. Two successive wage rises of 10%
15. Compound interest does seem fairer than simple interest because the interest is calculated only on the money in the account.
Sometimes the compound interest rate is lower, so a comparison needs to be done on the alternatives.

Investigation | Rich task

1. Five-cent coin: echidna
Ten-cent coin: lyrebird
Twenty-cent coin: platypus
Fifty-cent coin: coat of arms
One-dollar coin: five kangaroos
Two-dollar coin: Aboriginal elder Gwoya Jungarai
2. Refer to the table.
3. 5c, 10c, $2, $1, 20c, 50c
4. The five-cent coin has a smaller diameter, 1.09 mm.
5. $5, $10, $20, $50, $100
6. 7 July 1992; $5
7. Answers will vary.
8. The different sizes allow blind people to tell the difference between each note.
9. The fifty-dollar and one-hundred-dollar notes are used less frequently.

Exercise 2.10 Review questions

1. $1755.77 2. $33 225.92 3. $129.50 4. a 5. $460
6. a. $12.34 b. $524.28
7. a. $27.50 b. 80 cards
8. $23.50 9. $570 10. $3428.57
11. a. $938.46 b. $4410.76 12. $37 500
13. a. $500 b. $37.00 c. 7.4% d. $357.65
14. a. $147 b. $4147
15. $414.06 16. 11.5%
17. a. $19 009.60 b. $3009.60
I
18. 31.5 19. N = 20. $17.55 21. C
PR

TOPIC 2 Financial mathematics 69

70 Maths Quest 9 Stage 5 NSW Australian curriculum