Profit and Loss
Profit = Revenue - Expenses
What is the formula for calculating profit?
This type of expense remains constant regardless of sales.
What are fixed expenses?
Simple Interest (I) = Principal (P) × Rate (r) × Time (t)
What is the formula for calculating simple interest?
Interest calculated on the principal plus any accumulated interest.
What is compound interest?
A business has $15,000 in revenue and $10,000 in expenses. They had $5,000 left over.
What is profit?
Costs that vary, such as materials or utilities.
What are examples of a variable expense?
This is the simple interest on a $2,000 investment at 5% for 3 years.
What is $300?
fixed rates remain constant, variable rates can change.
What is the difference between fixed and variable interest rates?
This is when expenses exceed revenue.
This is a financial loss.
Because it helps in budgeting and financial planning.
What is a reason it is important to categorize expenses?
Total Repayment = Principal + Interest
What is the formula to calculate total repayment on a loan?
This is the primary benefit of compound interest compared to simple interest .
Compound interest allows you to earn interest on both the initial principal and on the interest that accumulates over time, leading to potentially higher returns.