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Consumer Mathematics: Financial Management · Form 4

Consumer Mathematics: Financial Management: Worked Examples (Easier)

Covers the basic one-step skills of this chapter: finding simple interest with I = Prt, reading off a maturity value with MV = P(1 + r)n, and picking the best buy by unit price. Good for building confidence before multi-step questions.

General information only, not financial advice.

Written by the spmmath.com.my editorial team.

Worked example 1

Puan Lily deposits RM2 000 in an account that pays simple interest at 3.5% per year. Find the interest earned after 2 years.

Use I = Prt.

  1. Write the values: P = RM2 000, r = 3.5% = 0.035 per year, t = 2 years.
  2. Substitute into I = Prt: I = 2 000 × 0.035 × 2.
  3. Multiply: 2 000 × 0.035 = 70, then 70 × 2 = 140.

Worked example 2

A savings certificate of RM1 000 grows by compound interest at 4% per year for 2 years. Using the maturity-value formula MV = P(1 + r)n, find the maturity value.

  1. List values: P = RM1 000, r = 4% = 0.04, n = 2.
  2. Substitute: MV = 1 000 × (1 + 0.04)2 = 1 000 × (1.04)2.
  3. Work out the power: (1.04)2 = 1.0816.
  4. Multiply: MV = 1 000 × 1.0816 = 1 081.60.

Worked example 3

A shop sells the same cooking oil in two sizes. Pack A: 400 g for RM5.00.

Pack B: 1 kg for RM11.00. Which pack is the better buy?

Compare by price per kilogram.

  1. Pack A: change 400 g to kg → 400 g = 0.4 kg.
  2. Pack A price per kg = RM5.00 ÷ 0.4 = RM12.50 per kg.
  3. Pack B price per kg = RM11.00 ÷ 1 = RM11.00 per kg.
  4. Compare: RM11.00 < RM12.50, so Pack B costs less per kg.

Worked example 4

RM1500 is saved at a simple interest rate of 4% per year for 3 years. Find the interest earned.

  1. Write the simple interest formula: I = P × r × t.
  2. Substitute P = 1500, r = 4% = 0.04, t = 3: I = 1500 × 0.04 × 3.
  3. Calculate: I = 60 × 3 = 180.

Worked example 5

RM2000 is invested at 3% per year compound interest for 2 years. Find the amount at the end of 2 years.

  1. Use the compound interest formula: A = P(1 + r)ⁿ.
  2. Substitute P = 2000, r = 0.03, n = 2: A = 2000(1.03)².
  3. Evaluate (1.03)² = 1.0609.
  4. A = 2000 × 1.0609 = 2121.80.

Worked example 6

A 250 g pack of biscuits costs RM3.00 and a 600 g pack costs RM6.60. Find the price per 100 g of each pack and state which is the better buy.

  1. Price per 100 g of the 250 g pack: RM3.00 ÷ 250 × 100 = RM1.20.
  2. Price per 100 g of the 600 g pack: RM6.60 ÷ 600 × 100 = RM1.10.
  3. Compare: RM1.10 < RM1.20.

Worked example 7

Encik Wong deposits RM3 200 in a savings account that pays simple interest at 2.5% per year. Find the interest earned after 4 years.

Use I = Prt.

  1. Write the simple interest formula: I = Prt.
  2. Substitute P = 3 200, r = 2.5% = 0.025, t = 4.
  3. I = 3 200 × 0.025 × 4.
  4. I = 80 × 4 = RM320.

Worked example 8

Puan Zaiton invests RM1 500 in a fund that pays compound interest at 5% per year. Using the maturity-value formula MV = P(1 + r)n, find the maturity value after 3 years.

  1. Write the maturity-value formula: MV = P(1 + r)n.
  2. Substitute P = 1 500, r = 5% = 0.05, n = 3: MV = 1 500(1.05)3.
  3. (1.05)3 = 1.157625.
  4. MV = 1 500 × 1.157625 = RM1 736.44 (to the nearest sen).

Source:DSKP KSSM Mathematics Form 4 and 5 (Versi English)

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Frequently asked questions

What's covered at the easy level of financial management?

Easy questions check the basics: reading and completing a simple cash-flow statement (income minus expenses), and calculating simple or compound interest for a single period using the standard formula. You're mainly tested on correct substitution and keeping units (RM) consistent throughout.

What formulas do I actually need to memorise for this topic?

Know simple interest I = Prt, and compound interest where the amount after n periods is A = P(1 + r)ⁿ. You should also be comfortable finding net cash flow as total income minus total expenses.

Practise substituting values directly from a word problem into these formulas without mixing up rate and period.

What's a common mistake in easy financial-management questions?

Students often mix up simple and compound interest formulas, or forget to convert a percentage rate to a decimal before substituting. Another frequent slip is not writing the money answer to a sensible number of decimal places, which markers expect for a currency value.

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