📘Business Math
🔑 What is Business Math?
● Business Math is the use of mathematics in business, finance, and economics.
● It helps in solving problems related to money, sales, investments, loans, interest, and profit.
💰 Key Topics in Business Math
1. Fractions, Decimals, and Percentages
● Percent (%) means “per hundred.”
● Conversion:
○ Fraction → Decimal → Percentage
○ Example: ¼ = 0.25 = 25%
● Used in discounts, markups, taxes, and interest.
2. Ratio and Proportion
● Ratio: comparison of two numbers (e.g., 2:5).
● Proportion: equation stating two ratios are equal.
● Example: If 3 pens cost ₱45, then 6 pens cost ₱90.
3. Simple Interest (SI)
Formula: SI = P × R × T
● P = Principal (amount borrowed or invested)
● R = Rate (annual interest rate in decimal)
● T = Time (in years)
Example: Borrow ₱10,000 at 10% for 2 years → SI = 10,000 × 0.10 × 2 = ₱2,000
4. Compound Interest (CI)
Formula: A = P (1 + r/n)^(n×t)
● A = Future Value
● P = Principal
● r = Rate (decimal)
● n = number of compounding periods per year
● t = time in years
Example: ₱5,000 at 8% compounded annually for 2 years → A = 5,000(1+0.08)^2 = ₱5,832
5. Discounts and Markups
● Discount: Reduction in price.
Formula: Discount = Original Price × Discount Rate
● Selling Price with Discount = Original Price – Discount
● Markup: Added amount to cost to get selling price.
Formula: Selling Price = Cost + Markup
6. Taxes
● Sales Tax / VAT: Extra percentage added to the selling price.
Formula: Tax = Price × Tax Rate
7. Profit and Loss
● Profit = Selling Price – Cost Price
● Loss = Cost Price – Selling Price
● Expressed as percentage of cost.
8. Payroll and Wages
● Gross Pay = Hours Worked × Rate per Hour
● Net Pay = Gross Pay – Deductions (taxes, insurance, etc.)
9. Simple Annuities
● Regular equal payments made over time.
● Example: monthly payments for a loan or insurance.
● Formula uses compound interest concepts.
📊 Why Business Math is Important
● Helps in budgeting, investing, and decision-making.
● Useful for business owners, accountants, bankers, and consumers.
● Builds financial literacy for everyday life.