Business Mathematics – Soft Copy Notes
1. Introduction to Business Mathematics:
Business Mathematics involves mathematical concepts applied in finance,
accounting, economics, and business decision-making. Key areas include
percentages, interest calculations, profit analysis, and financial statements.
2. Fractions, Decimals, and Percentages:
Fractions in Business:
Used in sales, pricing, and profit-sharing.
Example: A store gives a ¼ discount on an item worth $200. The discount is
$50.
Decimals in Business:
Used in monetary calculations.
Example: A tax rate of 7.5% is written as 0.075 in decimal form.
Percentages in Business:
Used in profit margins, discounts, and tax rates.
Formula:
Percentage = (Part ÷ Whole) × 100
Example: If a company makes $500 profit on a $2000 investment:
(500 ÷ 2000) × 100 = 25%
3. Profit, Loss, and Markup Profit and Loss:
Profit = Selling Price – Cost Price
, Loss = Cost Price – Selling Price
Markup:
Markup is the added percentage on the cost price.
Formula:
Selling Price = Cost Price + (Cost Price × Markup Percentage)
Example: A product costing $50 is marked up by 40%. The selling price is:
50 + (50 × 0.40) = 70
4. Simple and Compound Interest Simple Interest:
Formula:
SI = P × r × t
Where P = Principal, r = Rate, t = Time in years.
Example: A $1000 investment at 5% per year for 3 years:
1000 × 0.05 × 3 = 150
Compound Interest:
Formula:
A = P (1 + r/n)ⁿᵗ
Where A = Final amount, n = number of times compounded per year.
Example: A $2000 investment at 4% compounded annually for 2 years:
A = 2000 (1 + 0.04)² = 2163.20
5. Depreciation
The decrease in asset value over time.
Straight-Line Depreciation Formula:
D = (Cost – Salvage Value) ÷ Life in Years
Example: A machine costs $5000, has a salvage value of $500, and a
lifespan of 5 years:
1. Introduction to Business Mathematics:
Business Mathematics involves mathematical concepts applied in finance,
accounting, economics, and business decision-making. Key areas include
percentages, interest calculations, profit analysis, and financial statements.
2. Fractions, Decimals, and Percentages:
Fractions in Business:
Used in sales, pricing, and profit-sharing.
Example: A store gives a ¼ discount on an item worth $200. The discount is
$50.
Decimals in Business:
Used in monetary calculations.
Example: A tax rate of 7.5% is written as 0.075 in decimal form.
Percentages in Business:
Used in profit margins, discounts, and tax rates.
Formula:
Percentage = (Part ÷ Whole) × 100
Example: If a company makes $500 profit on a $2000 investment:
(500 ÷ 2000) × 100 = 25%
3. Profit, Loss, and Markup Profit and Loss:
Profit = Selling Price – Cost Price
, Loss = Cost Price – Selling Price
Markup:
Markup is the added percentage on the cost price.
Formula:
Selling Price = Cost Price + (Cost Price × Markup Percentage)
Example: A product costing $50 is marked up by 40%. The selling price is:
50 + (50 × 0.40) = 70
4. Simple and Compound Interest Simple Interest:
Formula:
SI = P × r × t
Where P = Principal, r = Rate, t = Time in years.
Example: A $1000 investment at 5% per year for 3 years:
1000 × 0.05 × 3 = 150
Compound Interest:
Formula:
A = P (1 + r/n)ⁿᵗ
Where A = Final amount, n = number of times compounded per year.
Example: A $2000 investment at 4% compounded annually for 2 years:
A = 2000 (1 + 0.04)² = 2163.20
5. Depreciation
The decrease in asset value over time.
Straight-Line Depreciation Formula:
D = (Cost – Salvage Value) ÷ Life in Years
Example: A machine costs $5000, has a salvage value of $500, and a
lifespan of 5 years:
