**consumer maths**

## interest

- Interest is a lender’s reward for providing funds to a borrower.
- In finance, a lender typically expects a larger rate of interest for longer loan terms.
- One method of interest calculation is simple interest. This is where interest is calculated on the original principal – the formula being I = PRT.
- Another method is compound interest where interest is calculated on the changing principal – the formula being I = P x [1+R]
^{t }– P.

## discounts

- Goods and services sometimes have discounts at certain times of the year.
- This video outlines the methods to calculate the discount when the reduced price is missing, and the discount applied when the original price is missing.

## currencies & conversions

- When traveling overseas or making international online transactions, knowing how to convert currencies becomes very useful.
- Currency exchanges assign each currency a three-letter symbol. For example, the Australian dollar is AUD.
- Currency pairs show the exchange rate from one currency into another. For example, the exchange rate from Australian dollars into euros is presented as AUD/EUR.
- When performing conversions it is necessary to identify the base currency (on the left) and the quote currency (on the right).

## penalty rates & commissions

- Employers sometimes provide additional payments during inconvenient working periods, or for high performance in certain roles.
- This video outlines how to calculate total pay when penalty rates and commissions apply.

## payslips

- Employers must present employees with a payslip within 1 day of pay.
- This document needs to specify details such as work period, leave entitlements, gross pay, and tax deducted.
- Unless arranged beforehand, employers deduct pay from employees in the form of PAYG (pay-as-you-go) tax payments to the ATO. These details are important to keep come financial year end when completing a tax return.
- Employers contribute superannuation to a fund which you have chosen, and this money is on top of gross pay. As of 2017/18 financial year, this payment is 9.5% of gross pay.

## gst

The Goods and services tax (or GST) is a broad-based tax that applies to most goods and services in Australia. It was introduced by the Howard government in 2000. If a business has revenues above a certain threshold, it is compulsory that it collects GST on behalf of the government. Ultimately it is the consumer who bears the additional cost. GST is currently 10%.

**Problem 1:** If the original price of a book is $50, what is the retail price after GST has been applied?

**Answer:** Multiply $50 by 1.10. The answer is $55.

**Problem 2:** If the retail price of a chair is $88, what is the original price before GST was applied?

**Answer:** Divide $88 by 11, and then multiply by 10. The answer is $80.

**take consumer maths quiz**