money income tax banks & building societies savings and interest compound interest appreciation...
TRANSCRIPT
MoneyMoney
Income Tax
Banks & Building Societies
Savings and Interest
Compound Interest
Appreciation & Depreciation
Working Backwards
21 Apr 202321 Apr 2023 Created by Mr. Lafferty Maths Dept.Created by Mr. Lafferty Maths Dept.
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1.1. Understand the term weekly Understand the term weekly monthly and annual salary. monthly and annual salary.
1. To explain how to work out weekly, monthly and annual salary / wage.
2.2. Calculate weekly, monthly Calculate weekly, monthly and annual salary.and annual salary.
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w.m
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srevis
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Wages & SalariesWages & Salaries
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1. To explain how to work out Income Tax calculations.
1.1. Understand the term Understand the term Income Tax.Income Tax.
2.2. Calculate Income Tax for a Calculate Income Tax for a given salary.given salary.
Income TaxIncome Tax
If your income in a tax year is below a certain value you do not pay tax. The tax allowance is made up of a personal allowance plus other special allowances.
Membership of professional
bodies
Special clothing
equipment
Income TaxIncome Tax
Taxable incomeTaxable income Rate of TaxRate of Tax
Up to £4745Up to £4745 0%0%
£0 - £2020 £0 - £2020 10%10%
£2020 - £31 400£2020 - £31 400 22%22%
Over £31 400Over £31 400 40%40%
Income TaxIncome Tax
Taxable Rates for 2004 / 05
Income TaxIncome Tax
Calculate David’s income tax if he earns £27 000 a year.
Personal allowance £4745
Taxable Income £27 000 – £4745 = £22 255
Tax @ 10% = 10% of £2020 = £202
£4653.70
Tax @ 22% = 22% of ( £22 255 - £2020)
Taxable incomeTaxable income Rate of TaxRate of Tax
Up to £4745Up to £4745 0%0%
£0 - £2020 £0 - £2020 10%10%
£2020 - £31 400£2020 - £31 400 22%22%
Over £31 400Over £31 400 40%40%
= 22% of £20 235 = £4451.70
Total Income tax = £202 + £4451.70 =
Income TaxIncome Tax
Lauren, a successful business woman earns £70 000.What is her total tax paid and her income after tax.
Personal allowance £4745
Taxable Income £70 000 – £4745 = £65 255
Tax @ 10% = 10% of £2020 = £202
£20 207.60
Tax @ 22% = 22% of ( £31 400 - £2020) = £6463.60
Taxable incomeTaxable income Rate of TaxRate of Tax
Up to £4745Up to £4745 0%0%
£0 - £2020 £0 - £2020 10%10%
£2020 - £31 400£2020 - £31 400 22%22%
Over £31 400Over £31 400 40%40%
Total tax = £202 + £6463.60 + 13 542 =
Tax @ 40% = 40% of ( £65 255 - £31 400) = £13 542
Income TaxIncome Tax
£20 207.60
Taxable incomeTaxable income Rate of TaxRate of Tax
Up to £4745Up to £4745 0%0%
£0 - £2020 £0 - £2020 10%10%
£2020 - £31 400£2020 - £31 400 22%22%
Over £31 400Over £31 400 40%40%
Total tax = £202 + £6463.60 + 13 542 =
= £49 792.40
Income after tax = £70 000 - £20 207.60
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1.1. To know the meaning of To know the meaning of the term simple interest.the term simple interest.
1. To understand theterm simple interest and compound interest.
2.2. To know the meaning of To know the meaning of the term compound the term compound interest.interest.
Savings & InterestSavings & Interest
3.3. Know the difference Know the difference between simple and between simple and compound interest.compound interest.
99
Just working out
percentagesSimple InterestSimple Interest
I have £400 in the Bank. At the end of each year I receive 7% of £400 in interest. How much interestdo I receive after 3 years. How much do I now have?
1010
I nterest = 7 ÷ 100 × 400 = £28
After 3 years interest is 3 x £28 = £84.
Total in bank is = £400 + £84 = £484
Savings & InterestSavings & Interest
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1.1. To know when to use To know when to use compound formula.compound formula.
1. To show how to use the compound formula for appropriate problems.
2.2. Solve problems Solve problems involving compound involving compound formula.formula.
1111
Compound InterestCompound Interest
Compound InterestCompound InterestInterest calculated on
new value every year
Real life Interest is not a fixed quantity year after year. One Real life Interest is not a fixed quantity year after year. One year’s interest becomes part of the next year’s amount. year’s interest becomes part of the next year’s amount. Each year’s interest is calculated on the amount at the Each year’s interest is calculated on the amount at the start of the year.start of the year.
Example
Daniel has £400 in the bank. He leaves it in the bank for 3 Daniel has £400 in the bank. He leaves it in the bank for 3 years. The years. The interest is 7%interest is 7% each year. Calculate the simply each year. Calculate the simply interest and then the interest and then the compound interestcompound interest after 3 years. after 3 years.
Principal value
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Daniel has £400 in the bank. He leaves it in the bank for 3 Daniel has £400 in the bank. He leaves it in the bank for 3 years. The years. The interest is 7%interest is 7% each year. Calculate the each year. Calculate the compound interestcompound interest and the amount he has in the bank and the amount he has in the bank after 3 years.after 3 years.
Y1 : Interest = 7% of £400 = £28
Amount = £400 + £28 = £428
Y 2 : Interest = 7% of £428 = £29.96
Amount = £428 + £29.96 = £457.96
Y 3 : Interest = 7% of £457.96 = £32.06Amount = £457.06 + £32.06 = £490.02
Compound is £490.02 - £400 = £90.02Simple Interest is only £84
Interest = 7% of £400 = £28
3 x 28 = £84
Simple Interest
Interest calculated on
new value every year
1313
Compound InterestCompound Interest
Easier MethodEasier Method
1414
n
100
%1IV
n = period of timeDays, months years
± = increase or decrease
I = initial value
V = Value
IMPORTANT
Can only use this when percentage
is fixed
This is called the multiplier.
Compound InterestCompound Interest
Calculate the money in the bank after 3 years if the Calculate the money in the bank after 3 years if the compound interest rate is 7% and the initial value is compound interest rate is 7% and the initial value is £400.£400.
V= 400 x (1.07)3 =
£490.02
1515
n
100
%1IV
n = 3
± = increase 1+0.07=1.07I =400
Compound InterestCompound Interest
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1.1. To know the terms To know the terms appreciation and appreciation and depreciation.depreciation.
1. To understand the terms appreciation and depreciation.
2.2. Show appropriate Show appropriate workingworkingwhen solving problems when solving problems containing appreciation containing appreciation and depreciation.and depreciation.
Appreciation & DepreciationAppreciation & Depreciation
1616
Appreciation : Going up in value e.g. House value
Depreciation : Going down in value e.g. car value
1717
Appreciation & DepreciationAppreciation & Depreciation
Average house price in Ayr has appreciated by 79% over Average house price in Ayr has appreciated by 79% over past 10 years.past 10 years.
If you bought the house for £64995 in 1994 how much If you bought the house for £64995 in 1994 how much would the house be worth now ?would the house be worth now ?
Appreciation Appreciation = 79% x £ 64995= 79% x £ 64995= 0.79 x £64995= 0.79 x £64995
= = £ 51346.05£ 51346.05New value New value = Old Value + Appreciation= Old Value + Appreciation
= £64995 + £51346.05= £64995 + £51346.05= = £ 116341.05£ 116341.05
Just working out
percentages
1818
Quicker MethodEasier
1.79 x 64995= £116341.05
1919
A Mini Cooper cost £14 625 in 2002A Mini Cooper cost £14 625 in 2002
At the end 2003 it At the end 2003 it depreciateddepreciated by 23% by 23%
At the end 2004 it will depreciate by a further 16%At the end 2004 it will depreciate by a further 16%
What will the mini cooper worth at end 2004?What will the mini cooper worth at end 2004?
End 2003 End 2003
Depreciation Depreciation = 23% x £14625= 23% x £14625
= 0.23 x £14625= 0.23 x £14625
= £3363.75= £3363.75
New valueNew value = Old value - Depreciation= Old value - Depreciation
= £14625 - £3363.75= £14625 - £3363.75
= = £11261.25£11261.25
Appreciation & DepreciationAppreciation & Depreciation
2020
End 2003 End 2003
Depreciation Depreciation = 23% x £14625= 23% x £14625
= 0.23 x £14625= 0.23 x £14625
= £3363.75= £3363.75
New valueNew value = Old value - Depreciation= Old value - Depreciation
= £14625 - £3363.75= £14625 - £3363.75
= £11261.25= £11261.25
End 2004 End 2004
Depreciation Depreciation = 16% x £11261.25= 16% x £11261.25
= 0.16 x £11261.25= 0.16 x £11261.25
= £1801.80= £1801.80
New Value New Value = £11261.25 - £1801.80= £11261.25 - £1801.80
= £9459.45= £9459.45
Appreciation & DepreciationAppreciation & Depreciation
Learning IntentionLearning Intention Success CriteriaSuccess Criteria
1.1. To understand the process To understand the process of work backwards.of work backwards.
1. To understand how to work backwards to find original price.
2.2. Solve problems using Solve problems using backwards process.backwards process.
Work BackwardsWork Backwards
2121
Example 1
After a 10% increase the price of a house is £88 000. What was the price before the increase.
Price before is 100% : £800 x 100 = £80 000
£88 000 110 = £8001 % :
100 % + 10 % = £88 000Deduce from question :
110 % = £88 000We have :
2222
Work BackwardsWork Backwards
Example 2
The value of a car depreciated by 15%. It is now valuedat £2550. What was it’s original price.
Price before is 100% : £30 x 100 = £3 000
£2 550 85 = £301 % :
100 % - 15 % = £2 550Deduce from question :
85 % = £2 550We have :
2323
Work BackwardsWork Backwards