MATHEMATICS TEACHING SLIDES

DISTRICT : SEKHUKHUNE
SOUTH
SUBJECT : MATHEMATICS P1
GRADE : 11
TOPIC : FINANCE, GROWTH
AND DECAY

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 FINANCE, GROWTH & DECAY

Simple & Compound Growth

Compound Interest with Nominal
Interest Rates
Simple Depreciation
 Compound Depreciation
Timelines
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 GRADE 11, FINANCE IN THE ATP
1. Revise grade 10 work: simple and compound growth
formulae and the implication of fluctuating foreign
exchange rates
2. Use simple and compound decay formulae:
• and
• To solve problems (including straight line depreciation
and depreciation on a reducing balance).
3. The effect of different periods of compound growth
and decay, including nominal and effective interest rates

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 SIMPLE & COMPOUND
GROWTH
 Real-life scenarios where growth occurs based on either
the simple interest formula or the compound interest
formula
Simple Growth Compound Growth

P = principal amount
A = accumulated amount
i = rate at which growth occurs
n = period of growth
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 Depreciation/Decay
 Certain items like cars, phone, machines lose over time and that is
called depreciation or decay
• Book-value is the depreciation value of items according to its books.
• Scrap-value is the value of an item after it has passed its useful life, eg.
Certain parts can be sold as scrap
 They are two types of decay/depreciation
• Simple decay or the straight line method of depreciation

• Compound decay or the reducing balance of depreciation

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 Depreciation/Decay
 Simple decay is linked to simple interest, while
compound decay is linked to compound interest
formulas

Simple Decay Compound decay

P = principal amount
A = accumulated amount
i = rate at which depreciation occurs
n = period of decay 6
 Graph of Simple Depreciation

 Since depreciation is constant, it is a straight line graph

… e.g. Value of Computer

2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Year 1 Year 2 Year 3 Year 4

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 Examples of Simple Decay
Example 1.
A company’s computer assets depreciate
at 10% p.a. If the value started off at R20
000, determine the value of the assets
after 3 years.
Solution 1
Example 2:
Calculate how long it will take an item
valued at R30 000 to depreciate to a
value of R10 000 at 8,5% p.a. on a
straight line method. Give your answer to
the nearest year.
Solution 2

10 000

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 Activities of Simple Decay

1. Determine the value of R13 000 after it has depreciated for 3 years at
6% p.a on straight line method.
2. Machine cost R48 000 has a scrap-value of R8 000 after 10 years.
Find the annual rate of depreciation, correct to 2 decimal places, if it
is calculated on a straight line method
3. If the depreciated value of a car is ¼ of the original value, determine
the original cost of the car after 4 years, based on straight line
depreciation of 7% p.a.

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 Graph of Compound Depreciation

 Since depreciation is exponential, it is a decreasing

exponential graph … e.g.

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 Example of Reducing Balance Method
Example 1. Example 2:
A car worth R225 000 depreciates by Cheryl leaves a bowl of soup to cool. The
6,6% p.a. based on a reducing balance. temperature of the soup decreases on a
Determine the value of the car after 4 reducing balance method at the rate of
years. 4% per minute, and it is now at 65 ⁰C.
Calculate the temperature of the soup
when she served it 6 minutes ago.

Solution 1 Solution 2

65
∴ P = 83,0397 ≃ 83 ⁰C

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 Activities of Compound Decay

1. Determine the original value of a company’s assets if it depreciated

to R144 000, after 3 years, at 4,5% p.a.
compounded.
2. A farmer bought a tractor. Five years later it had a book value of
R168 345,22. Determine the original value of the tractor if the annual
rate of depreciation was 14% p.a. on reducing balance method.
3. Photocopier machine cost R152 000 has a scrap-value of R8 000
after 10 years. Find the annual rate of depreciation, correct to 2
decimal places, if it is calculated on a reducing balance method

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 COMPOUND INTEREST with
NOMINAL INTEREST RATES
 Interest is calculated on the original amount plus the interest
added at each time interval
 Effective interest rate is the same as annual interest rate
 Nominal interest rate is calculated at different time intervals
e.g. monthly, quarterly etc.

= effective interest rate

= nominal interest rate
= frequency at which interest is calculated
(compounding period)
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 COMPOUND INTEREST with
NOMINAL INTEREST RATES continues…..
 With nominal interest rates, there is a change to n and i, with
compounding period, namely …
* Daily …
* Weekly …
* Monthly …
* Quarterly …
* Biannually …
 Biannually is half yearly or semi-annually
 n = number of years and m is a compounding period

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 COMPOUND INTEREST with
NOMINAL INTEREST RATES continues…..
Example 1.
Determine the effective annual interest
rate of 9,5% p.a compounded monthly,
correct to two decimal places.
Example 2.
Liora invests R9 750 for 3 years at 6%
p.a. compounded monthly. Determine
the value of Liora’s investment after 3
years.

Solution 1 Solution 2

0.0992475
9,92%

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 Activities on COMPOUND INTEREST with
NOMINAL INTEREST RATES
1. Determine the effective interest rate, to one decimal place, for these
interest rates:
a)10,5% p.a. compounded quarterly
b) 6,5% p.a. compounded daily
2. Determine how much Jason owes if he borrows R10 000 and pays it back over 2
years at an interest rate of 7,5% p.a. compounded quarterly
3. Khadija invested R25 000 into an account offering an interest at 10,3% p.a.
compounded quarterly:
a) Determine how much she has in her account after 6 years
b) How much interest has she received after 6 years?
c) What is the effective interest rate that Khadija obtained (to one decimal place)?
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 TIMELINES
 Timelines are used to visualize multiple
deposits / withdrawals and also multiple changes
in interest rates
 No marks are given for timelines – but they are
helpful!
 Always remember to round-off your FINAL
answer only – results in greater accuracy!

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 Example 1

R8 000 is deposited into a savings account. One year later,

R1 500 is withdrawn. Calculate the value of the account at
the end of 4 years, if interest is calculated at 11% p.a.
compounded quarterly.

R8 000 (R1 500) ??

11% p.a. compounded quarterly

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 Example 1 (cont.) …

Option 1 Option 2
End of Year 1:

00753125
Start of Year 1:
00753125
End of Year 4:

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 ACTIVITY
• Matthew invests R20 000 into an account. Two years later,
he makes another deposit of R45 000. The following year,
he withdraws R17 000 to buy an entertainment system. If
interest is calculated at 8,2% p.a. compounded monthly,
determine how much Matthew has saved after 7 years.
T0 T2 T3 T7

R20 000 R45 000 (R17 000) ??

8,2% p.a. compounded monthly

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 Example 2

• R1 700 is deposited into a savings account and earns

interest at 7% p.a. compounded semi-annually. After 3
years, the interest rate goes up to 8,5% p.a. compounded
quarterly. Determine the value of the account after 5 years.

T0 T3 T5

R1 700 ??
7% p.a. semi-annually 8,5% p.a. quarterly
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 Example 2 (cont.) …

][

Value after 3 years The interest rate

Becomes the new for the next 3
principal amount years
for next 2 years
!! This allows for greater accuracy!!

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 Example 3
Mrs Naidoo opened a savings account and the following transactions
occurred:
• She deposited R15 000 immediately
• Three years later she withdrew R
• After a further four year she deposited R21 500
• Seven years later (14 years after the initial investment), she had
R25 735,50 in her account.
Interest is calculated at 6% p.a. compounded annually for the first
five years, and 10% p.a. compounded quarterly for the next 9 years.
Draw time line to represent the above and calculate the value of

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 Example 3 continues

T0 T3 T5 T7 T14
𝟑𝟔
𝟓 𝟎 , 𝟏
𝟏𝟓 𝟎𝟎𝟎 𝟏𝟓 𝟎𝟎𝟎(𝟏+ 𝟎 . 𝟎𝟔) ( 𝟏+ )
𝟒 𝟑𝟔
𝟐 𝟎 , 𝟏
− 𝒙 − 𝒙 (𝟏 +𝟎 . 𝟎𝟔 ) (𝟏 + )
𝟒
𝟐𝟖
𝟎,𝟏
𝟐𝟏 𝟓𝟎𝟎 𝟐𝟏 𝟓𝟎𝟎 (𝟏 + )
𝟒

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Example 3 (cont.) …

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 ACTIVITY
1. Vicky invested R10 000 for a period of 10 years. During the first 3
years the interest rate is 9% p.a. compounded monthly. Thereafter,
interest changed to 12% p.a compounded semi-annually. Calculate
the future value of the investment after 10 years.
2. Mrs Mohamed opens a savings account and these transactions take
place:
• She deposit R8000 immediately, a further R6000 five years later.
• Two years after the deposit of R6000 she withdraws R10 000.
• Interest is calculated at 10% p.a. compounded annually for the first 2
years and at 9,5% p.a. compounded quarterly thereafter.
Draw a time line to represent the above and calculate the amount of
money that she has saved after 10 years.
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 Sources used
• Mind Action Series Grade 11
• Platinum Learner’s Book Grade 11
• Previous Mathematics Question Papers
• 2022 Diagnostic report for Mathematics
• 2023 Mathematics ATP
• CAPS Document

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The money you make
is a symbol of value
you create
By Idowu Koyenikan

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THANK
YOU 29