Grade 12 Mathematical Literacy

LO1 Personal Finances: Earning and Spending, Saving and Investing

1. Maxie, a nurse working for a government hospital, was offered a position at a private hospital. She is not sure whether she should accept the offer or not. She was told that she would earn R11 000 per month gross and that she would be required to work 35 hours per week. She is currently earning R6 500 per month net and works 45 hour weeks. The private hospital is 20 kilometres further from her home than the government hospital, which will result in an increase in her train fare of R580 per month. Her contract at the private hospital states the following as regards her salary: - She will pay normal taxation at a rate of 21%, after deduction her pension payment. - Her pension payment will be 5,5% of her gross salary. The private hospital will contribute 11% of her gross salary towards her pension. - She will belong to the Private Hospitals Medical Aid fund, which means a payment of R400 per month. - She will contribute 0.1% of her gross salary towards the Unemployment Insurance Fund. The private hospital will contribute double the amount that she contributes to the Unemployment Insurance Fund on her behalf.

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Grade 12 Mathematical Literacy

Take the above-mentioned information into account and answer the questions that follow. 1.1 1.2 1.3 1.4 1.5
1.6

How much will Maxies contribution towards her pension fund be? How much taxation will Maxie be required to pay? What will Maxies contribution towards the Unemployment Insurance Fund be? How much money will Maxie take home (her net salary)? Do you recommend that she accept the position offered by the private hospital? Give reasons for your answer. Although the private hospital will be paying into Maxies pension fund and her Unemployment Insurance Fund on her behalf, she will not be earning this money as part of her salary. This can, however, be seen as an additional salary. Take these additional payments into account to determine Maxies total gross salary.

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Grade 12 Mathematical Literacy

2. Maxie has drawn up her monthly budget based on her salary at the government hospital. Variable expenses Food Household Electricity Water, sewerage Telephone Train fare Bus fare 1,10 0 21 0 9 0 25 0 32 0 8 0 Fixed expenses Mortgage repayment Annual expenses Monthly expenses Savings Emergency fund Car savings Insurance TV Licence 2,100 C 20 2 25 0 25 0 27 6

Trans-port

Entertainment spending Personal

Clothing Recreational materials (reading) Personal allowance Entertainment Gym Satelite television TOTAL VARIABLE EXPENSES

20 0 Rates 12 0 TOTAL ANNUAL 15 EXPENSES PER 0 MONTH 25 TOTAL FIXED 0 EXPENSES 14 5 TOTAL INCOME 46 0 TOTAL EXPENDITURE B BALANCE

2,100

D E A F G

2.1

Calculate the amounts that should be recorded where the letters A to G are.

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Grade 12 Mathematical Literacy

2.2

Take into account her new transport costs and determine the letters A to G for her new salary at the private hospital. Maxie has been saving money to buy herself a car cash, as she does not want to pay finance charges on a new car. How much money will she be able to add to her current car savings?

2.3

3. Maxie decides to invest her extra money plus her general savings and her car savings into a fixed deposit. She telephoned various banks for quotes regarding their fixed deposits and compiled the following list: Interest Rate 11% 10.50% 11% 7,5%

Financial Institution ABSA Standard Bank Nedcor First National Bank 3.1

Compounded Half yearly Three monthly Half yearly Monthly

Restrictions Minimum 2 years Minimum 2 years Minimum 3 years Minimum 3 years

How much money does Maxie have to invest per month? (Round off your answer to the nearest Rand.) Determine how much money Maxie would earn on her investment if she invested one months savings for the minimum time required. Which is the best option for Maxie? Assume that Maxie chose the Peoples Bank, who offer an interest rate of 8,5% per annum compounded monthly, and decided to invest R1 121 monthly for twelve months. Use the table below and determine how much money she would have after twelve months. (Round off all calculations to the nearest cent.)

3.2

3.3
3.4

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Grade 12 Mathematical Literacy

Month 1 2 3 4 5 6 7 8 9 10 11 12

Amount invested Interest at 8,5% p.a. 1121 1121 x (8,5/1200) = 7,94 2249,94 15,94 3386,88

Value at end of New month investment 1128,94 1121 2265,88 1121 1121 1121 1121 1121 1121 1121 1121 1121 1121

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Grade 12 Mathematical Literacy

ANSWERS
1.1 1.2 1.3 1.4 1.5 Pension: R11 000 x 5,5% = R605 Taxation: (R11 000 R605) x 21% = R2 182,95 UIF: R11 000 x 0,1% = R11 Net Salary: R11 000 (R605 + R2 182,95 + R11 + R400) = R7 801,05 Yes: She will be taking home R1 301,05 more than she is currently taking home (net salary). Although she will be paying an extra R580 per month in travelling expenses, she will still be taking home R721,05 more for working 10 hours less per week (4 x 10 = 40 hours less per four week month). R11 000 + (R11 000 x 11%) + (R11 x 2) = R11 000 + R1 210 + R22 = R12 232 A B 6 500 3 350 7 801.05 3 930 R721.05 C D 150 198 150 198 E 3 150 3 150 F 6 500 7 080 G 0 721,05

1.6

2. 2.1 2.2 2.3

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Grade 12 Mathematical Literacy

3.1
3.2

R150 + R250 + R721 = R1 121 Compound Interest formula: A = P (1 + ABSA: Standard: Nedcor: First National:
R1388 ,72 = 1121 (1 + r n ) 100

11 4 ) 200 10 ,5 8 ) 300

R1476 ,14 = 1121 (1 +

R1545 ,68 = 1121 (1 +

11 6 ) 200 7,5 36 ) 1200

R1402 ,87 = 1121 (1 +

3.3

Three years: ABSA: Standard: Nedcor: First National:

R1545 ,68 = 1121 (1 + 11 6 ) 200 10 ,5 12 ) 300

R1693 ,91 = 1121 (1 +

R1 545,68 R1 402,87

Her best option would be Standard Bank. Her investment of R1 121 would grow to R1 693,91.

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Grade 12 Mathematical Literacy

3.4 Value at end of month 1128,94 2265,88 3410,87 4563,97 5725,24 6894,70 8072,48 9258,60 10453,12 11656,10 12867,6 14087,69

Month 1 2 3 4 5 6 7 8 9 10 11 12

Amount invested 1121 2249,94 3386,88 4531,87 5684,97 6846,24 8015,70 9193,48 10379,60 11574,12 12777,10 13988,60

Interest at 8,5% p.a. 1121 x (8,5/1200) = 7,94 15,94 23,99 32,10 40,27 48,49 56,78 65,12 73,52 81,98 90,50 99,09

New investment 1121 1121 1121 1121 1121 1121 1121 1121 1121 1121 1121

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