Financial arithmetic involves using basic math skills to solve problems related to money, including calculating interest, discounts, taxes, profits, and budgeting.
Simple interest is the extra amount of money earned or paid on a principal sum at a specific rate over a period of time. The formula for calculating simple interest is:
Simple Interest= (P×R×T)/100
Where:
P = Principal (the initial amount)
R = Rate of interest per year
T = Time (in years)
A percentage is a way of expressing a number as a fraction of 100. It is crucial in financial arithmetic because it is used to calculate interest, discounts, taxes, and profit margins.
Sales tax is a percentage of the selling price of goods and services, which is added to the total cost. To calculate it, multiply the selling price by the tax rate:
Sales Tax=Selling Price × Tax Rate
Profit or loss can be calculated using the formula:
• Profit: Profit=Selling Price−Cost Price
• Loss: Loss=Cost Price−Selling Price
