Unit 1: Review of Percentages

1.1 Percent Basics

Percent –

Converting a decimal number to a percent –

Converting a percent to a decimal number –

Converting a percent to a fraction –

Converting a fraction to a percent –

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1. Write the following as percents:
a. 0.45

b. 7.23

c. 0.0051

d. 0.0708

e. 12.54

f. 923.5

g. 0.0008

2. Write the following as decimal numbers:

a. 29%

b. 2.3%

c. 450%

d. 0.8%

e. ½ of 1%

f. 14.76%

g. 3/10 of a percent

h. 12,000%

i. 0.000067%

j. 1,806.002%

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3. Write the following as fractions in simplest form:
a. 11%

b. 75%

c. 310%

d. 0.4%

1
e. 2
%

f. 111%

g. 2/10 of 1%

4. Write the following as percents:

2
a. 5

1
b. 5 2

7
c. 2000

24
d. 5

1
e.
18

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1.2 Percent Problems
There are three parts to any problem involving percentages:

Percent Formula

Common words or phrases associated with Base and Part:

Base Part

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5. Find 32% of $675.

1
6. Find 4 % of 550.

7. $8 is 4% of what amount?

8. $26 is what percent of $154?

9. 54 is what percent of 12?

10. Sales tax in LA is 9.5%. How much tax would you pay to purchase a $52,000 vehicle?

11. Apple stock was $135 per share yesterday. Today, it increased 3.5%. In dollars, how much did

Apple stock increase?

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1.3 Percent of Change
When a value increases or decreases, there is a slightly different formula:

𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐ℎ𝑎𝑛𝑔𝑒
% =
𝑂𝑅𝐼𝐺𝐼𝑁𝐴𝐿 𝑎𝑚𝑜𝑢𝑛𝑡

12. Six months ago, Apple’s stock price was $240.36. Today, Apple’s stock price is $227.75. What is
the percent decrease in Apple’s stock price?

13. One year ago, Bitcoin was valued at $64,130 per coin. Today, Bitcoin is valued at $109,745.
What is the percent of change in Bitcoin’s value in one year?

14. Nvidia stock opened the trading at $112.50 per share and closed the day at $118.60. By what
percent did its stock price change?

15. The sales price of an item is $5.99. With sales tax, you pay $6.56. What percentage is sales tax?

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 16. Stock A rose in value from $50 to $75. Stock B fell in value over the same time period from $75
to $50. Did these two stocks have the same percent of change? Explain why or why not.

1.4 Markup and Discounts

Markup –

Discount –

Shortcut for percent increases and decreases

17. The DOW Jones index started the year at 39,000 and has increased 24% since then. What is the
DOW Jones’s new value after the increase?

18. You are going to purchase a new electric guitar. Its list price is $1,199.99 and sales tax is 8.5%.
Find the amount of sales tax and the sales price of the guitar.

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19. You receive $162 from an account earning 1.5% interest for the year. Find the amount of money
invested in the account.

20. In 2024, tuition at Buckley was $54,090. In 2025, tuition is $56,800. What was the percent
increase in tuition at Buckley between 2024 and 2025?

21. At the end of a trading day, Google’s stock price had increased by 3% to $207.50. What was
Google’s stock price at the beginning of that trading day?

22. Apple stock lost 8% of its value over the course of a trading day, closing the day at $337.50.
What was Apple’s stock price at the start of the trading day?

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23. A new LCD TV is discounted by 20% from its original price. It is now selling for $1,759.99. What
was the original price of the TV?

24. Due to increased demand for a patented process that helps analyze the DNA of test mice, Biotics
Genome has increased production by 20% per year for the past two years. This year’s
production is 95,000 kits. Find the number of kits produced two years ago.

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 Unit 2: Investing
2.1 Business Organization
Why do people start businesses?

Types of business organizations:

● Sole proprietorship –

o Partnership –

● Corporations –

Shares of stock –

Public vs. private –

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IPO –

Shareholders –

Annual meeting –

Board of Directors –

Dividends –

SEC -

Insider trading -

25. Jason invests $25,000 in a partnership that has 5 other partners. The total investment of all the
other partners is $350,000. What percent of the business does Jason own?

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26. The total number of shares of stock in a corporation is 8,000,000. If Jack owns 7% of all shares,
how many shares does he own?

27. If Andrew buys 5,000 shares of a company that has issued a total of 650,000 shares, what
percent of the company does Andrew own?

28. Three partners are opening a business with a total of $1,500,000. Their investments are in the
ratio 2:5:12. How much is each partner investing?

29. A partnership with 2 partners is worth about $250,000. A customer slips on a wet floor in their
store and sues for medical expenses and emotional damages. A lawyer decides in her favor and
awards her $1.1 million. What is the value of any personal property that each partner must
forfeit to pay the settlement? Explain.

30. A private corporation owned by 5 partners is worth an estimated $9 million. The corporation
loses a lawsuit worth $30 million. What is the value of any personal property that each partner
must forfeit to pay the settlement? Explain.

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2.2 Stock Market Data
Stock exchange –

Stock quote –

stock ticker – Thomas Edison 1869

Five parts of a stock ticker:

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Use the ticker above to answer the following questions.
31. Name all stocks (5) that have recently been traded according to the stick ticker.

32. How many shares of WAG were just traded?

33. What is the current stock price of GOOG?

34. What is the change in the stock price of SFT since the last trade?

35. How would a trade of 15,600 shares of a company appear on a stick ticker?

36. What was the previous day’s closing price in the stock ticker below?

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Use the stock chart above to answer the following questions.

37. How many shares of BK were traded yesterday?

38. What is the percent of change between the 52-week high and low price of a share of CIB?

39. Ignoring commission, find the cost for the following purchases:

a. 800 shares of BCR at the close for the week

b. 300 shares of BOH at the low for the year

40. Which stock had the lowest share price over the last year?

41. Which stock had the highest share price over the last year?

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2.3 Dividends, PE Ratio and Current Yield
Dividends -

Current Yield -

42. Last quarter, PepsiCo issued dividends of $0.81 per share. If the current stock price is $111.80,
find the current dividend yield to the nearest tenth of a percent.

Earnings per Share –

Price-earnings ratio –

43. Find the P/E ratio of a company with a current stock price of $87.12 and annual EPS of $3.72.

Trailing P/E ratio –

Forward P/E ratio –

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using the PE ratio:

44. You are considering purchasing CVS or Dick’s Sporting Goods. Use their respective PE ratios to
make an argument to purchase either stock.

45. Find the PE ratio of Google (GOOG).

46. Find the current yield of Exxon Mobil (XOM).

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2.4 Common & Preferred Stock
common stock -

preferred stock -

benefits of preferred stock -

limits of preferred stock -

Earnings per share -

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Steps to solve dividend allocation problems

i. Determine the total dividend payout (percentage * profits)

ii. Determine how much each preferred shareholder will receive (yield * par value)
iii. Determine the total preferred shareholder dividend payout
iv. Subtract total preferred from total dividend
v. Divide remaining dividends by common shareholders

47. A corporation issued 100,000 shares of $20 par value, 8% yield preferred stock. It later declared
its first dividend of $500,000.
a. What dividend would each preferred shareholder receive?

b. If the company had 1,000,000 outstanding common stock, what dividend would each
receive?

48. A corporation issued 75,000 shares of $35 par value, 6.5% yield preferred stock. It later declared
its first dividend of $500,000. If there are 900,000 outstanding common shares, find the
dividend per preferred stock and per common stock.

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49. A corporation has issued 50,000 preferred shares that pay dividends of $1.25 per share, and
10,000,000 shares of common stock. During the most recent quarter, the company had profits
of $4,000,000 and the board of directors decided to pay out 35% of profits as dividends. How
much would each common stockholder receive in dividends?

50. A corporation has issued 175,000 preferred shares that pay dividends of $3.85 per share, and
25,000,000 shares of common stock. During the most recent quarter, the company had profits
of $1,500,000 and the board of directors decided to pay out 19% of profits as dividends. How
much would each common stockholder receive in dividends?

51. A company has issued 150,000 shares of $125 par value, 8.75% yield preferred stock. It also has
2,000,000 outstanding common shares. This quarter, the board of directors decided to issue
$1,000,000 in dividends. How much will each preferred and common shareholder receive in
dividends?

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52. A company has revenue of $20,000,000 and has decided to distribute 1% as dividends. There are
20,000 shares of preferred stock with a par value of $10 at 2.5% yield, and 125,000 shares of
common stock. How much will each preferred and common shareholder receive in dividends?

53. What is this company’s EPS for this year?

54. List 4 differences between common and preferred stock.

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2.5 Diversification
There are means to diversify your portfolio other than purchasing numerous individual stocks.

Stock index -

Mutual funds -

Examples of types of mutual funds

● balanced fund ● income fund

● global bond fund ● industry fund

● global stock fund ● municipal bond fund

● growth fund ● regional stock fund

Exchange-traded funds -

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Page 23
2.6 Cryptocurrency
What is a currency?

What is a cryptocurrency?

blockchain -

Non-fungible token -

SEC -

Insider trading -

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2.7 Market Capitalization & Stock Splits
outstanding shares –

market capitalization –

Size of corporations:
● nano cap ● mid cap

● micro cap ● large cap

● small cap ● mega cap

traditional stock split –

Why do companies do a traditional stock split?

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reverse stock split –

Why do companies do a reverse stock split?

fractional part of a share –

42. Find the market cap of a company with 250M shares outstanding whose stock price is
currently $25.19.

43. Find the number of shares outstanding if a company’s market cap is $16B and whose
stock price is currently $45.09.

44. Find the current stock price of a company whose market cap is $9B and whose total
outstanding shares is 750,000,000.

45. Qualcomm instituted a 4-for-1 stock split. If Amy Stake owned 800 shares before the
split, how many will she own after the stock split?

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46. When Qualcomm instituted their 4-for-1 stock split, their stock price was $328.17. What
will the stock price be after the stock split?

47. Ulta was considering a 2-for-5 reverse stock split. If their market cap was $3.4B before
the split, what would their market cap be after the split?

48. Suppose that before a stock split, a certain stock was trading at $2.35. After the split,
the stock price was $7.05 a share. What was the stock-split ratio?

49. Ty Prater owned 1,045 shares of Hollow Corp at a price of $62.43. The stock split 3-for-
2.
a. How many shares will he own after the stock split?

b. What will be the post-split stock price?

c. How much will he be paid for any fractional shares he now owns?

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50. Yesterday, Duff Corp instituted a 7-for-2 stock split. Before the split, the price of one
share was $178.09 and the corporation had 2.3B outstanding shares.
a. What was the pre-split market cap for Duff Corp?

b. What was the post-split market cap for Duff Corp?

c. What was the post-split number of outstanding shares for Duff Corp?

d. What was the post-split market price per share for Duff Corp?

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2.8 Stock Transactions and Fees
commission -

full service broker -

discount brokers -

online broker -

round lots -

odd lots -

mixed lots -

Return on investment (ROI):

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37. Kaivan’s stockbroker charges a 1.5% commission rate for trading round lots and 2.5% on
the odd lot portion of the trade.
a. If he decides to purchase 350 shares of Estee Lauder (EL) at $123.67, what is his
total cost for the purchase?

b. After one year, Kaivan decides to sell the 350 shares of EL now priced at $153.90.
He uses the same broker and pays the same commission rate (1.5% commission
rate for trading round lots and 2.5% on the odd lot portion of the trade). What
are his net proceeds from the sale of the stock?

c. What is Kaivan’s ROI for this investment?

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2.9 Bonds

bond –
loans to firms, consisting of legally binding contracts between the lenders and the borrowers
often require interest payments every year, and repayment at a specific date in the future

differences between stocks and bonds –

par value –

term -

maturity date –

coupon rate –

issuer -

interest –

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yield -

the price of a bond fluctuates in the opposite direction of interest rates

effective interest rate -

bankruptcy -

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bond rating system –

Types of bonds
● corporate bonds –

o zero coupon bonds –

o convertible bonds –

● government (treasury) bonds –

● municipal bonds –

● junk bonds –

Bond market –

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 Premium bond –

Discount bond –

bull market –

bear market –

No matter the current market price of a bond, interest is always paid on the par value (usually
$1,000 per bond) and that is what is repaid at maturity

On bond tables, the value of the bond is quoted as a percentage of par value.

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62. Find the current price of one GS bond maturing in 2037.

63. Find the coupon rate of one T bond maturing in 2041.

64. Find the current yield of an ABIBB bond maturing in 2042.

65. What is the highest priced bond on this table?

66. What is the lowest priced bond on this table?

67. Find the price to purchase 10 UTX bonds maturing in 2042 at the current price including
a commission of $8 per bond.

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68. Find the annual interest payment of 10 UTX bonds maturing in 2042.

69. Find the effective interest rate of this UTX bond. How does it compare to the yield listed
in the table?

70. Find the amount received from the sale of 50 Apache (APA) bonds maturing in 2043.
Assume a commission of $5 per bond.

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2.10 Short-Selling Stock and Limit Orders
Short selling – a way to trade stock to profit when its share price decreases

Limit orders – guarantees price, trade may not be filled

• buy limit order is placed below the current market price, and will only be executed at
that price or lower

• sell limit order is placed above the current market price, and will only be executed at
that price or higher

Stop orders – triggers a market order once price has been reached, the trade may be different
than the stop price

• buy stop order is placed above the current market price. When the stop price is hit, it
becomes a market order to buy
o Use this to cover a short position to limit your losses
• sell stop order (stop-loss) is placed below the current market price. When the stop price
is hit, it becomes a market order to sell

• trailing stop order follows the price of the stock by the trail you set
o it moves up but not down

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 Unit 3: Banking

3.1 Banking, Checking Accounts, and Check Registers

investment bank –

commercial bank –

Credit union –

FDIC –

types of accounts –

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 71. Use the table below to find the monthly service charge for the following business
accounts.

a. Omni Computer, 38 checks written, average balance $983

b. Jamison Auto Repair, 62 checks written, average balance $4,632.25

c. 23andMe, 117 checks written, average balance $487

Parts of a check

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Parts of a deposit slip

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 72. Write a check to John Elway for $1,093.56 for being a QB.

Check register: a table that shows a running total of all transactions including deposits, checks,
ATM withdrawals, refunds, and electronic deposits or payments
73. Complete the balance column in the following check register.

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Services offered by banks: Most services offered by banks come with an associated fee

Debit cards –

overdraft protection –

returned deposit item –

stop-payment order –

cashier's check –

money order –

notary service –

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3.2 Bank Statement Reconciliation
What is bank statement reconciliation?

Importance of Reconciling a Checking Account

Types of errors to look for when reconciling bank statement

Sample bank statement:

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Page 44
74. Reconcile the following account.

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 Unit 4: Wages and Taxes

4.1 Wages (hourly and salary)

It is important to know the following:

Days in each month:

January – ________ May – ________ September – ________

February – ________ June – ________ October – ________

March – ________ July – ________ November – ________

April – ________ August – ________ December – ________

Weeks in the year – ________ Months in the year – ________

Days in the year – non-leap year________/ leap year ________

Gross earnings – _____________________________________________________________________

hourly wages – ______________________________________________________________________

● A normal work day is ______ hours

● A normal work week is ________ hours

salary – ___________________________________________________________________________

Salary is generally paid in one of the following ways:

● weekly (_______ times per year)

● bi-weekly (once every two weeks, _______ times per year)

● semi-monthly (twice a month, ________ times per year)

● monthly (_______ times per year)

● quarterly (_______ times per year)

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There is a federal minimum wage ______________ and each state and even cities can institute their
own minimum wage as long as it is at least equal to the federal minimum wage.

California minimum wage: ________________

Los Angeles minimum wage: _______________

West Hollywood minimum wage: ________________

Federal minimum wage for tipped employees: _________________

Overtime –____________________________________________________________________________

According to federal law, if you are an hourly employee, you must be paid overtime for all hours over 40
that you work in one week.

Companies can elect to pay employees overtime for all hours over 8 that you work in a day.

Salaried employees do not have to be paid overtime. But companies can elect to pay salaried employees
overtime.

To find salary plus overtime:

● Determine the equivalent hourly rate by dividing weekly salary by 40

● Multiply the regular rate by 1.5 to find overtime rate
● Multiply overtime rate by the amount of overtime hours
● Add overtime wages to salary to find gross earnings

75. Brandon worked 10 hours Monday, 10 hours Tuesday, 10 hours Wednesday, and 10 hours
Thursday as a snake milker. He is paid $12.73 per hour. Find his gross earnings for the week if his
company pays overtime at time-and-a-half for all hours over 40 worked in a week.

76. George worked the same schedule: 10 hours Monday, 10 hours Tuesday, 10 hours Wednesday,
and 10 hours Thursday as a dog food tester. He is also paid $12.73 per hour. Find his gross
earnings for the week if his company pays overtime at time-and-a-half for all hours over 8
worked in a day.

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 77. Mendez makes a salary of $845 per week as a feng shui consultant. Her company pays her
overtime at time-and-a-half for all hours she works over 40 hours in a week. If one week she
worked 47 hours, find her gross earnings.

78. Find each person’s weekly gross salary.

a. Liz – $62,652 annually

c. Maya – $3,598 semi-monthly

b. M – $10,981 monthly

d. Chase – $714 bi-weekly

79. Who grosses more annually, Harrison with a bi-weekly salary of $2,769, or Charlie with a semi-
monthly salary of $2,958?

80. Mitchell earns $22.80 per hour at his job as a Starbucks barista. He is paid time-and-a-
half for everything worked over 40 hours in a week. Find his gross earnings for a week in
which he worked 9.5 hours on Monday, 7 hours on Tuesday, 10.75 hours on
Wednesday, 8.25 hours on Thursday, and 8 hours on Friday.

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4.2 Wages (piecework and commission)
commission – ________________________________________________________________________

● People who work in marketing or sales are usually paid on commission

● This is used as an incentive to get employees to work harder, as opposed to paying them by the
hour

straight commission – __________________________________________________________________

81. Liubov is a real estate agent is paid a straight commission of 3.5% on the sale of a condo for
$675,000. Find her gross earnings on the sale of the condo.

commission with returns – _______________________________________________________________

82. Harris sells cell phones and makes a straight commission of 7.5% on net sales. Last month he
had sales of $19,056 and returns of $2,350. Find his gross earnings for the month.

variable commission – __________________________________________________________________

83. At Sara’s job as a car warranty salesperson, she is paid a commission rate of 6% on sales up to
$10,000, 8% on sales from $10,001-$20,000, and 10% on sales over $20,000. Find her gross
earnings on sales of $35,506.

salary plus commission – ________________________________________________________________

84. As a car salesperson, Bennett earns a salary of $750 per month plus 6% commission on total
sales. In December, he had total sales of $142,956. Find his gross earnings for the month.

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sales quota – __________________________________________________________________________

85. Maddie works in a high-end clothing store and earns 9% commission after meeting her monthly
quota of $20,000. Last month, she had total sales of $28,569. Find her gross earnings for the
month.

override – ____________________________________________________________________________

86. Spencer is a division manager at Sprint. He earns a straight 5% commission on his total sales plus
an override of 2.5% on the total sales for his division. Last month, he had sales of $10,567 and
his division had total sales of $65,980. Find his gross earnings for the month.

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4.3 Social Security and Medicare Taxes
tax – a portion of income paid to a local, state, or federal
governmental agency to support public programs (police, fire, roads,
schools, defense) and to fund the government
● The tax rate is either progressive (federal income) or flat
(Social Security and Medicare)

● Employers must withhold all required taxes from their

employees’ gross earnings

● This includes federal income, state income, social security

(OASDI), and Medicare tax

● Depending on the state, it can also include state disability

insurance (SDI), union dues, or retirement contributions

● After taxes and other deductions have been taken out of the
pay check, the employee is left with their net pay (take home
pay)

The Federal Insurance Contributions Act (FICA) was passed in the 1930s and is now divided into
two categories:
Social Security or Old Age, Survivor, and Disability Insurance (OASDI)
● It gives a monthly payment to retired workers and now includes a death benefit and
Medicare payments

● The social security tax rate is 6.2% on the first

$176,100 of earnings in 2025

● The employer pays the same rate as the employee

● Self-employed people pay double

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Medicare
● Medicare is health insurance for retirees

● The Medicare tax rate is 1.45% on all earnings

● The employer pays the same rate as the employee

● Self-employed people pay double

These contributions are tied to your social security number.

Future payments from social security are based on your career earnings and contributions

87. Find the social security and Medicare taxes due for the following two employees.

D. Nice: $478.53 A. A. Ron: $2,903.62

88. Jay Quellen has grossed $175,000 so far this year. His gross earnings for the current pay
period are $5,800. Find her social security tax for the current pay period considering
that the social security tax rate is 6.2% on the first $176,100 of earnings in 2025

Self-Employed Workers
● People who are self-employed pay higher social security and Medicare tax

● They pay double the rate since there is no employer to match their contribution

● This means they would pay 15.3% total (12.4% OASDI and 2.9% Medicare tax)

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 89. Buh Lockeh runs his own business and last year he grossed $174,308.54. Find his net
earnings after paying OASDI and Medicare taxes.

State Disability Insurance Deductions

● Most states have a state disability insurance (SDI) program that is paid for by employers

● If you are ever permanently disabled, you would receive weekly disability benefits based
on your wages

● Employees must also contribute to SDI taxes

● In California, it is 1.2% on all earnings

90. T’moe’thy has gross earnings of $5,200 this pay period. Find the amount of social
security, Medicare, and SDI taxes that will be withheld.

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4.4 Income Tax
● Personal income tax is the largest source of revenue for the federal government
● Laws require that the tax owed by each person be paid periodically, as the income is
earned
● These deductions are called income tax withholdings and are sent to the Internal
Revenue Service (IRS)
● Married people that file jointly have a different set of brackets than single filers
● It is a progressive tax based on the following brackets:

● All tax filers can either itemize deductions or take the standard deduction listed below.
● The standard deduction is a specific dollar amount that reduces the amount of income
on which you're taxed.

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W-4
● Each employee must file a W-4 form with their employer
● It asks for number of dependents you will claim.
● This form determines how much federal tax your employee withholds from each
paycheck.

Finding federal income tax

● Unlike Social Security tax, income tax is paid on all gross earnings

● The scale is progressive so theoretically the more you earn, the more tax you will owe

● Use a calculator online to determine this amount

91. Max is married with two kids, and his weekly gross earnings as a professional mourner
are $1,375. Find his net earnings after federal income tax is withheld.

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 92. Ella earns a salary of $76,585 yearly as a professional bridesmaid, is paid bi-weekly, and
is single with no kids. Find the amount of income tax to be withheld from each
paycheck.

93. Remy grosses $4,568 semi-monthly as a face feeler, and he is married with four kids.
Find the amount of federal income tax to be withheld from each of his paychecks.

State income tax

● Most states and some cities also collect income tax

● Alaska, Florida, Nevada, Texas, South Dakota, Tennessee, and Wyoming have no income
tax

● Washington state taxes only capital gains income

● New Hampshire taxes only dividend and interest income

● Twenty states have a flat tax rate

● Twenty-one states and the District of Columbia have progressive rates like the US

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Net pay
● Net pay is the final amount received by the employee

Gross earnings
– FICA tax
– Medicare tax
– Federal income tax
– SDI
– State income tax
– Other deductions (retirement)
Net Pay

94. Dominic is married with five kids. As an online dating ghost-writer, he earns a yearly
salary of $37,805 and is paid weekly. His lives in Utah where the SDI withholding rate is
1.1% and he contributes 7% of his gross earnings to a retirement account. Find his net
pay each paycheck.

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 Unit 5: Using Credit
5.1 Credit Scores
What is credit?

What are the three main types of credit?

1. ________________________________

2. ________________________________

3. ________________________________

Who uses credit?

Where does one typically use credit?

If you were a lender, which of the four consumers would you extend credit to?

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What is your credit score?

What affects your credit score?

● ________________________________________________________________________

● ________________________________________________________________________

● ________________________________________________________________________

● ________________________________________________________________________

● ________________________________________________________________________

Who determines your credit score?

● FICO Score: 300-850 ● TransUnion (TransRisk): 100-900
● VantageScore 3.0: 300–850 ● Experian National Equivalency
Score: 360-840
● VantageScore (versions 1.0 and 2.0):
501–990 ● Equifax: 280–850
● PLUS Score: 330-830 ● CreditXpert: 300-900

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 ● ScoreSense: 350-850

So, what…? Why does your credit score matter?

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5.2 Credit Cards

● Unsecured revolving credit –

● Annual Fee –

● Annual Percentage Rate (APR) –

● Credit limit –

● Over-the-limit fees –

● Itemized billing –

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 ● Grace period –

● Finance charges –

● Late fees –

● Minimum payment –

● Cash advance –

Credit card companies determine finance charges in one of two ways:

● unpaid balance – the balance in your account at the end of the previous month
or
● average daily balance method – the balance owed on the account is found at the end of
each day during a month or billing period, all of these amounts are added and divided
by the number of days in the month

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5.3 House Loans
Mortgage –

Loan terms –

Factors that affect your interest rate:

Down payment –

Private mortgage insurance (PMI) –

Credit score –

Debt-to-income ratio –

Cash reserves –

Sub-prime mortgage –

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5.4 Buying a House
Owning vs. Renting

Equity –

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 Unit 6: Interest
6.1 Simple Interest

interest – ______________________________________________________________________
● Your credit card charges you to purchase stuff before you pay them for it
● Banks charge interest for loans they give out
● Banks also pay interest for certain funds that you keep in the bank
● Islamic banks cannot charge interest, so they take partial ownership of businesses to
which they "lend" money and are repaid through profits

principal – ____________________________________________________________________

simple interest – ________________________________________________________________

compound interest – _____________________________________________________________

prime rate – ___________________________________________________________________

What is simple interest?

Simple Interest Formula

I = P  R  T

I – __________________________________________________________________________

P – __________________________________________________________________________

R – __________________________________________________________________________

T – __________________________________________________________________________

maturity value – ________________________________________________________________

Finding Maturity Value

M = P + I
or

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 M = P (1 + R  T )

exact interest – _________________________________________________________________

banker’s interest – ______________________________________________________________

Here is a link to an online simple interest calculator.

Some tricky aspects of simple interest

● If time is given in months, divide by 12 when plugging into the formula
● If time is given in days, divide by 365/366 when plugging into the formula to find exact
interest
● If time is given in days, divide by 360 when plugging into the formula to find
ordinary/banker’s interest
● If time is given between two dates, find the number of days and then divide by 365 or
360
● Always change the rate into a decimal when plugging into the formula
● Don't round until the end of the problem

95. Find the simple interest on a car loan of $60,595 for 5 years at 7.5%.

96. Find the maturity value of a loan of $12,500 for 5 months at 8% simple interest.

97. Find the exact simple interest on a loan of $84,000 for 300 days in a non-leap year at
9.75%.

98. Find the banker’s simple interest on a loan of $132,000 from May 3 to October 27 at
7%.

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 99. Find the due date, interest, and maturity value for a $450,000 loan made to Novak
Industries on April 30, 2024 for 8 months at 7.5% simple interest.

6.2 Compound Interest

What is compound interest?

Compound Interest Formula

nt
 r
M = P 1 + 
 n
Where M = maturity value/future value
P = principal (initial investment amount)
r = annual interest rate
n = number of compounding periods in a year
t = time in years

Depends on four factors:

a. _______________________________

b. _______________________________

c. _______________________________

d. _______________________________
Compounding period – the number of times interest is calculated and added to the principal

● Annually – once per year

● Semiannually – twice per year
● Quarterly – four times per year
● Monthly – 12 times per year
● Weekly – 52 times per year
● Daily – 365/366 times per year

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Rule of 72 – calculates the approximate time over which an investment will double at a given
rate of return “r.” It's given by (72 ÷ r). It can only be used for annual compounding but it can be
very helpful in planning how much money you might expect to have in retirement.

Some examples of compound interest are:

Investments (CDs, dividends, etc.)

Management fees
Tuition
Home values
Credit cards
Inflation
Inflation – the continual rise in the price of goods and services, meaning a dollar is worth less
each year

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Find the compound amount and interest for problems 1-4. Round all answers to the nearest
cent.
100. $125,250 at 5.5% compounded semi-annually for 8 years

101. A house worth $1,200,000 that appreciates 6% annually for 10 years

102. $150 at 3.5% compounded weekly for 35 years

103. $50,000 at 4.25% compounded daily for 6 months

104. Max invests $50,000 in an ETF that returns 8% annually on average. The ETF has
a 0.05% management fee. Harris invests $50,000 in a mutual fund that returns 8%
annually on average. The fund has an expense ratio of 1.15%. After 40 years, how much
more will Max have earned than Harris?

105. When looking for a new investment, Liz finds a one bank willing to pay 2.65%
interest compounded monthly and another bank paying 3% compounded semi-monthly.
If she wants to invest her money for 5 years, which bank should she choose? How much
more interest will she earn at that bank?

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 Unit 7: Car Insurance
Insurance – ____________________________________________________________________
______________________________________________________________________________
Premiums – ___________________________________________________________________
● Cost is determined by actuaries who look at the frequency and severity of accidents
based on several factors, including:
o __________________________________________________________________
o __________________________________________________________________
o __________________________________________________________________
o __________________________________________________________________
o __________________________________________________________________
Facets of car insurance
● Liability – protects the insured in case they injure someone or damage property with a
car. Most states have a minimum amount of liability insurance required to be able to
operate a car.
o Bodily injury liability – pays for injuries to people caused by a car
o Property damage liability – pays for damage to property caused by a car

Liability insurance is expressed as three numbers, such as 100/300/100.

● Medical Payments (personal injury protection) – pays for medical bills for the driver and
their passengers
● Uninsured and Under insured Motorists – pays the insured in case the person who
caused the accident does not have any insurance, or not enough insurance
● Collision – pays for repairs to the insured’s vehicle when it is involved in a collision with
another vehicle

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 ● Comprehensive – pays for repairs to the insured’s vehicle caused by fire, theft,
vandalism, or an act of God
o Deductible –

No-fault insurance – some states (FL, HI, KS, KT, MA, MI, MN, NJ, NY, ND, PA, and UT) have no-
fault laws. This means each person’s insurance must pay for that person’s damage, no matter
who is at fault

At-fault insurance – all other states have at-fault laws (including California). This means
whoever is as fault in an accident must pay for all damages

Youthful-operator factor – younger drivers pay more in car insurance premiums than more
experienced drivers, the premium is multiplied by the factor in the following table:

106. Sara has 100/300/100 policy limits, and collision insurance with a $500
deductible. She caused an accident that resulted in $5,500 in damage to her car,
$12,000 in damage to the other car, and severe injuries to the driver and the passenger
of the other vehicle. A subsequent lawsuit for injuries resulted in a judgement of
$145,000 and $35,000, respectively, to the other parties. Find the amounts that the
insurance company will pay for:
a. Repairing Sara’s car

b. Repairing the other car

c. Paying the court judgment from the lawsuit

d. How much will Sara have to pay out of pocket?

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