Grade 12 Mathematics Unit 5 : Mathematical Applications in Business

Unit 5, “Mathematical Applications in Business,” connects your Grade 12 Mathematics skills to the practical world of finance, commerce, and economics. This unit demonstrates how mathematical principles are essential tools for making informed financial decisions, from personal savings to corporate investments.

Chapter 5.1 – Basic Mathematical Concepts in Business

This chapter introduces the fundamental vocabulary and calculations used in commerce.

• Define and work with core business terms like Cost, Revenue, Profit, and Loss.
• Master the basic profit equation: Profit = Revenue – Cost.
• Calculate markups and discounts using percentages to determine selling prices.
• Understand break-even analysis, the point at which a business’s revenue equals its costs.

Chapter 5.2 – Time Value of Money

Learn the single most important concept in finance: that money available today is worth more than the same amount in the future.

• Define Present Value (PV), the current worth of a future sum of money, and Future Value (FV), the value of an asset at a specific date in the future.
• Differentiate between:
  • Simple Interest: Interest calculated only on the principal amount.
  • Compound Interest: Interest calculated on the principal and the accumulated interest from previous periods.

Chapter 5.3 – Saving, Investing and Borrowing Money

This section applies the time value of money to real-world financial activities.

• Saving and Investing: Explore annuities, which are a series of equal payments made at regular intervals, used for things like retirement planning. Learn how to calculate their future value.
• Borrowing Money: Understand loans and mortgages. Learn about amortization, the process of paying off debt over time with regular installments.
• Calculate regular loan and mortgage payments using financial formulas.

Chapter 5.4 – Taxation

Understand the basics of how governments collect revenue and how taxes are calculated.

• Define taxation and its purpose in funding public services.
• Learn about different types of taxes that affect individuals and businesses, including:
  • Income Tax (based on earnings)
  • Value-Added Tax (VAT) (a tax on goods and services)
  • Property Tax
• Practice calculating tax liabilities in various practical scenarios.

Learning Outcomes

By the end of this unit, you will be able to:

• Know common terms related to business, such as profit, cost, and revenue.
• Understand basic financial concepts like the time value of money.
• Calculate simple and compound interest, loan payments, and the future value of investments.
• Apply mathematical principles to practical situations involving saving, investing, and taxation.