Sales Tax & Discounts
51.6
This income is what you see. It is what you take home after all deductions and adjustments.
Net income
I = Prt is the formula for what?
Simple Interest
are like a regular savings plan where you put in the same amount of money at the same time (monthly, yearly, quarterly, etc.)
Annuities
We use this formula *Ms. Drennen will write on the board* to calculate payments on _______ and _______.
Car payments and home mortgages
A new pair of shoes cost $75. If the sales tax is 7.25%, what is the sales tax amount?
$5.4375
What is your total income for the year called?
gross income
Calculate the simple interest earned on a $5,000 deposit at a 4% interest rate for 5 years.
$1,000
is how much money you’ll have in total at the end, including all of your deposits and the interest you earned.
Value of an annuity
How is the interest determined when we calculate these payments?
We take the amount we calculated for the payment, subtract our "nt", and then subtract from the original loan amount.
If a new shirt is $25 and the sales tax is 6%, what would be the total amount of the shirt?
$26.50
If someone paid $7,500 in income tax at a rate of 25%, what was their taxable income?
$30,000
A = P(1 + rt) is the formula for what with simple interest?
Future Value, the value of an asset at a specific date.
What is the formula for the value of the annuity?
A = P[(1 + r/n)^nt - 1] / r/n
is the practice of paying a specified amount of money over a specified time for the use of a product.
Leasing
A pair of jeans originally priced at $80 is on sale for 20% off. What is the discount amount?
What is the sale price of the jeans?
Discount amount: $16
Sale price: $64
What is the formula for adjusted gross income, AGI?
Gross income - Adjustments
A = P(1 + r/n)^nt
What is this the formula for?
WHAT DOES "A" STAND FOR?
Compound interest
"A" is future value.
You deposit $500 at the end of each year into a savings account that earns 4% interest per year, compounded annually. What will be the value of the annuity after 5 years?
$2,708.25
is a long-term loan for buying a home
Mortgage
You pay a new outfit for $120 and the sales tax is 7%. When you get to the register you realize you have a coupon for 20% off. What is the total price with the sales tax and the discount?
$102.72
What type of deductions do you list separately if you have incurred a large number of deductible expenses?
Itemized deductions
Calculate the compound interest earned on a $2,000 deposit at a 3% interest rate compounded quarterly for 2 years.
$123.2 approximately
Your parents start a college savings annuity for you. They deposit $3000 at the end of each year for 10 years into an account that earns 5.5% interest per year, compounded annually. How much money will be in the account when you are ready for college?
$38,666.18
How do we calculate "points" on a mortgage?
We take the amount of points (1 point for example), convert it from a percent (1%) to a decimal (.01) and then multiply by the amount you are borrowing