Investing and borrowing.
Use transparent hypothetical models to compare saving, investment and borrowing. Track timing, percentages, compound factors, fees, share cash flows, inflation and repayments, then explain the limits of a numerical conclusion.
Work through the topic
Learn the method, follow the examples, then try the worksheet.
- 01
Percentage/financial arithmetic
Calculate financial percentage changes and recover an original value.
- 02
Savings accounts and fees
Track account transactions and compare earnings after fees.
- 03
Simple interest
Use and rearrange the simple-interest model with consistent time units.
- 04
Compound interest and compounding periods
Match the rate per period and period count in compound-interest calculations.
- 05
Present/future value
Find a single payment’s future or present value and count elapsed periods correctly.
- 06
Effective annual rates
Convert rates with different compounding periods into a common annual measure.
- 07
Comparing investments
Compare investment outcomes using a shared time horizon, net amounts and model assumptions.
- 08
Share purchases/sales, brokerage and dividends
Calculate share transaction costs, dividend income and net gains from supplied prices.
- 09
Return on investment
Measure profit or loss relative to the actual investment cost.
- 10
Tax/inflation effects on returns
Distinguish gross earnings, after-tax growth and purchasing-power growth in a supplied model.
- 11
Credit costs
Calculate the total cost of supplied credit arrangements and distinguish price from repayments.
- 12
Personal loans and comparing borrowing with saving
Compare borrowing now with saving first, using a clearly timed balance model.
Topic review
Revisit the key ideas, then choose a practice paper.