COMPOUND INTEREST

CONTENTS

1. Profit and loss (revision)
2. Simple interest (revision)
3. Compound interest
4. Word problems.

PROFIT AND LOSS (REVISION)

When any transaction is done, we either make profit or a loss. When an article is sold at a price greater than the price it was bought, then a profit is made. On the other hand, if an article is sold at a price less than the cost, we have made a loss.

Hence,

Profit = selling price – cost price

Loss = cost price – selling price

In commercial transactions, profit and loss are usually expressed as a percentage of the cost price.

That is, profit percent \(= \frac{\text{profit}}{\text{cost price}} × 100\%\)

Loss percent \(= \frac{\text{loss}}{\text{cost price}} × 100\%\)

Examples:

1. A trader bought a book for ₦75 and sold it for ₦86. What is the profit percent?

Solution

Cost price = ₦75

Selling price = ₦86

Profit = selling price – cost price

= ₦86 – ₦75 = ₦11

profit percent \(= \frac{\text{profit}}{\text{cost price}} × 100\% \\ = \frac{11}{75} × 100\% = 14.67\%\)

2.