Credit Vs. Debit
Which can you have first: a debit account or a credit account?
Debit
What is the difference between gross income and net income?
Gross income is the money you make before taxes are deducted. Net income is the money you actually get to use after taxes are deducted.
How much interest would be earned if I deposited $6,000 for 12 years at a simple interest rate of 9%?
I=prt
= (6,000)(0.09)(12)
= $6,480
Which formula solves for the interest alone: simple or compound?
Simple
Define 'asset' and 'liability'. (50 points each)
Asset: cash or things of value you own
Liability: something you owe (debt)
What is the term for getting cash from a cashier during a purchase at a store?
Cashback
What do CPP and EI stand for? (100 points each)
Canada's Pension Plan
Employment Insurance
What would be the total value of my investment if I deposited $7,500 at a simple interest rate of 10% for 8 years?
I=prt
=(7,500)(0.1)(8)
=6,000
6,000+7,500= $13,500
What are the TWO MAIN DIFFERENCES between simple interest and compound interest? (100 points each)
1. Simple interest solves for just the interest, where compound interest solves for the total value
2. Compound interest earns interest on the principal AND all previously earned interest, where simple interest is only earned on the principal
Provide 2 examples of assets.
Varies
Name two instances in which you may choose to (or need to) use a credit card instead of a debit card?
* online purchases
* expensive emergencies
What is each type of income tax used for? (100 points each)
CPP, EI, General income tax
CPP: money you get after you retire
EI: money you get when you suddenly can't work and are looking for a job
Income tax: public services (schools, libraries, roads, etc.)
How long would I need to invest $2,000 at a simple interest rate of 5% to earn $400 in interest?
T=I/(pr)
= 400 / (2,000*0.05)
= 400 / 100
=4 years
If I invest $5,000 at an interest rate of 1% for 10 years, would I earn more interest using simple or compound interest?
I=prt
=(5,000)(0.01)(10)
=500
5,000+500=5,500
A = p(1+r)t
= (5,000)(1.01)10
=(5,000)(1.1)
=5,500
NO DIFFERENCE!
Provide 3 examples of liabilities.
Varies
We learned that credit cards can be dangerous for your financial health, but sometimes you absolutely must use your credit card. Outside of emergencies, describe WHY you must use a credit card at least sometimes?
You use it to build a good reputation with the bank (credit report) so that you can buy a house or car.
Dorothy's gross income was $50,000. She paid 5.7% CPP and 1.6% EI. What was her net income?
(50,000)(0.057)= $2,850
(50,000)(0.016)= $800
50,000 - 2,850 - 800 = $46,350
Daniel made a deposit of $12,500. After 15 years, his account had earned $3,750 in interest. What was the simple interest rate?
r = (3,750) / (12,500)(15)
r = (3,750) / (187,500)
r = 0.02
The rate is 2%.
What would my investment of $10,000 be worth if I invested at a simple interest rate of 7% for 15 years?
I= (10,000)(0.07)(15)
= 10,500
10,000+10,500= $20,500
Calculate the net worth:
Jacinta has $15,000 in liabilities and $48,000 in assets.
48,000 - 15,000 = $33,000
Last month, I had a credit card bill totaling $2,325. I didn't pay my bill so now I have to pay this months bill of $2,112, plus last month's bill AND 19% interest on last month's balance. What is this month's bill going to total?
(0.19)(2,325)= 441.75
2,235 + 2,112 + 441.75 = $4,788.75
In 2022, April's EI deductions totaled to $700. This represents 1.6% of her gross salary. What was April's total gross income in 2022?
(Hint: No multiplication required!)
y = 700 / 0.016
= $43,750
I made a deposit for 36 months at a simple interest rate 12% and earned $180 in interest. What was my principal?
p= 180 / (0.12)(3)
= 180/ 0.36
= $500
How much interest would I earn if I deposited $8,000 for 20 years at a compound interest rate of 3%?
A = p(1+r)^t
= 8,000(1.03)^20
= (8,000)(1.81)
=14,480
14,480-8,000= 6,480
Sort these items into assets and liabilities.
1. Current value of your house
2. Diamond ring
3. Student loans
4. Savings account
5. Credit card debt
6. Current value of car
1. asset
2. asset
3. liability
4. asset
5. liability
6. asset