For applied arithmetic questions it will be necessary to solve problems involving financial transactions; for example mobile phone bills, currency exchange, shopping, VAT, profit or loss, compound interest, income tax and net pay. In solving these problems it is important to be able to use ratio and proportions and be able to work capably with percentages.
(a)Cathy works in a bakery and earns €8.65 per hour. She works 40 hours a week. Find Cathy's gross pay for the week.
¤8.65 x 40 = ¤346.00
(b)Cathy has to pay income tax at a rate of 20%. Find Cathy's gross tax.
346 x 20% = 346 x 20 = 69.20
(c)She has a tax credit of €20 per week. Find Cathy's net tax.
¤69.20 - ¤20.00 = ¤49.20
(d)How much per week is she left with?
¤346.00 - ¤49.20 = ¤296.80
(e)Cathy had €1650 saved in the credit union at the beginning of a year. The credit union paid 4.5% interest on her
money. Find the interest earned in that year.
¤1650 x 4.5% = 1650 x 4.5 = ¤74.25
(f)Cathy wants to use this interest to pay an electricity bill. Electricity costs 20 cent per unit. She used 250 units. The bill also has a standing charge of €30. Calculate the electricity bill.
250 x 0.20 = ¤50
¤50 + ¤30 = ¤80
(f)Does Cathy have enough money from the interest to pay the electricity bill? Explain your answer.
No. The interest earned is ¤74.25 this is not enough to pay the ¤80 electricity bill, an additional €5.75 is