Income Tax and Interest

Conversions

100

5% as a decimal

0.05

200

36 months = _________ Years?

3 years

300

15% annually is what percent weekly? (Round answer to 2 decimal places. 

0.29%

400

1.25% quarterly is what % annually?

5% annually

500

2.75% Biannually = What annually? Write your answer as a decimal. 

0.055

Definitions

100

What kind of interest is it when it is only calculated on the principal, the original amount borrowed or invested?

Simple Interest

200

What letter do we assign to the amount of money that is borrowed or invested?

P

300

In the formula for compound interest. What does A stand for?

A stands for the amount in the account.

400

What is another word for flat rate interest?

Simple Interest

500

What does semi annually mean?

Twice a year, two times a year.

Simple Interest

100

Using I= P X R X T 

Calculate the interest if:

P = 4000

R = 4%

T= 2.5 years

$400

200

Find the simple interest on $250 at 4% for 2 years.

$20

300

A car loan of $15 000 is charged at 4.5% simple interest for 4 years. Find the total amount repaid.

$2700

400

A student says simple interest “earns interest on interest.” Explain why this is incorrect.

Simple interest is interest only on the principal. 

500

A person invests $3500 and earns $980 simple interest at 7% per year. How long was the money invested?

4 Years

Compound Interest

100

$200 becomes $220 after compounding. How much interest was earned?

$20

200

Find the final amount for $500 at 5%pa compounded annually for 2 years.

$551.25

300

A savings account starts with $9500 at 5% compound interest for 6 years. Find the final amount.

$12 730.29

400

Explain why compound interest is powerful for long-term savings.

Money grows exponentially because interest keeps being added to the balance

500

Find the final amount for $8000 at 7% pa, compounded annually for 72 months.

A≈12005.61

Tax Tables

100

Why do governments collect income tax?

To fund services like schools, hospitals, roads, and emergency services

200

What is Medicare Levy?

An additional charge helping fund healthcare

300

Annual Earnings ($)          Tax Payable ($)

^{0–18 2000                             Nil}

^{18 201–45 000          16% of amount over 18 200}

^{45 001–120 000       $4288 + 30% of amount over 45 000}

^{120 001–180 000        $26 788 + 37% of amount over 120 000}

^{180 001 and over         $48 988 + 45% of amount over 180 000}

^{How much Tax is payable on $25000} 

$1088

400

Annual Earnings ($)          Tax Payable ($)

^{0–18 2000                             Nil}

^{18 201–45 000          16% of amount over 18 200}

^{45 001–120 000       $4288 + 30% of amount over 45 000}

^{120 001–180 000        $26 788 + 37% of amount over 120 000}

^{180 001 and over         $48 988 + 45% of amount over 180 000}

^{How much tax is payable on $145 000 ?}

36038

500

Annual Earnings ($)          Tax Payable ($)

^{0–18 2000                             Nil}

^{18 201–45 000          16% of amount over 18 200}

^{45 001–120 000       $4288 + 30% of amount over 45 000}

^{120 001–180 000        $26 788 + 37% of amount over 120 000}

^{180 001 and over         $48 988 + 45% of amount over 180 000}

Bill had deductions of $4500, if he earned $110 000, calculate his taxable income and how much tax he would pay. 

22438