Financial mathematics teaching Approach


Finance forms an integral part of the Mathematics syllabus. Financial mathematics has one of the widest applications in everyday life and is important in every aspect, form budgets to home/car loans to investments. It is a dream of most people to own a house, car, retire with enough money and other essential commodities that we do not always have the cash to pay for. Hence most of us will go and make a loan from a bank or from any other financial institutions and invest money so that we can retire in some comfort. Grade 12 finance, growth and decay gives the learner an in depth understanding of the formulae that financial institutions use to calculate interest, loan amounts and investments.

This chapter highlights the importance of saving, investing and loan repayment. If the skills outlined in this guide are mastered by the learner, it will put them in good stead to make sound financial decisions. Therefore it is imperative to ensure that basic principles are well understood. In Grade 12, all financial mathematics concepts are tested, from the mundane simple interest calculations, to timelines to present value and future value annuities or investments.

Teachers must please note that not all the formulae relating to financial mathematics are given on the formula page/s. The following formulae will appear on the formula page:

 Hints on solving financial mathematics questions

 If different amounts are invested at irregular intervals draw a timeline.

Fill in as much detail as possible on the timeline i.e. the amounts invested and when they have been invested (e.g. T0 R1500 ), when amounts have been withdrawn,

 what the interest rate is for a certain time period and how it is compounded.

Make sure that you know which formulae to use. Incorrect formulae will always result

in zero marks.

Always write down the formula, followed by the substitution of the values.

Do not round off until you have the final answer of a question.

Always round off to two decimal places, unless the instructions read otherwise.

Check that your answer is reasonable. It is impossible to end up with a negative

value for n, the investment period or the number of equal payments.

Care must be taken when punching values into the calculator, especially when it

comes to the brackets. If brackets are left out it might lead to a “maths error”.

Attempts must be made to use real life examples as to ensure that learners will be able to identify with the examples.

Students need to be reminded about the different compounding of interest and how to change the value of i depending on the compounding.

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