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LECTURE No. 2 Business Math

Bus Math

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Emery Carlyle Obille
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29 views2 pages

LECTURE No. 2 Business Math

Bus Math

Uploaded by

Emery Carlyle Obille
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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LECTURE No.

Commission on Installment Basis. The commission is divided into a certain number of


payments depending on the number of periods that have been agreed upon.

Example:

At ABC Gadget Store, some items are paid on an installment basis through credit cards. Mike
was able to sell 10 cell phones costing ₱18,000 each. Each transaction is payable in 6 months
equally divided into 6 equal installments without interest. Mike gets a 2% commission on the first
month for each of the 10 cell phones. Commission decreases by 0.30% every month thereafter
and is computed on the outstanding balance for the month. How much commission does Mike
receive in the first month? On the second month? On the third month? On the fourth month? On
the fifth month? On the sixth month? At the end of the installment period, how much will be his
total commission?

Solution:
First month commission: ₱18,000/cellphone x 10 cellphones x 0.02 = ₱3,600
Second month commission: ₱15,000/cellphone x 10 cellphones x (0.02 – 0.003) = ₱2,550
Third month commission: ₱ 12,000/cellphone x 10 cellphones x (0.017 – 0.003) = ₱1,680
Fourth month commission: ₱ 9,000/cellphone x 10 cellphones x (0.014 – 0 .003) = ₱990
Fifth month commission: ₱ 6,000/cellphones x 10 cellphones x(0.011 – 0.003) = ₱480
Sixth month commission: ₱3,000/cellphone x 10 cellphones x(0.008 – 0.003) = ₱150
His total commission for six months is ₱9,450.

Down payment is the first payment that one makes when one buys something with an
agreement to pay the rest later

Book Balance or Gross. This refers to the total amount of money a bank has on deposit before
adjusting for uncleared checks or deposits, as well as reserve requirements. That is, the book
balance is a measure of what the bank has on hand before adding or subtracting regulatory
obligations and items that will soon appear on its books. This is the term used by banks to describe
the amount of money available before any adjustment is made for deposits in transit, checks that
have not been cleared, and reserve requirements and interest received from “float funds”.

Example:
A simple case of gross balance refers to what is readily available for you to use based on your
bank deposits. For example, a check amounting to ₱5,000 that has been deposited today may
not be withdrawn the next day because it has not cleared yet. If your bank passbook currently
contains ₱30,000, you may not be able to withdraw the whole amount yet because your gross
balance is only ₱25,000 since your check has not been cleared yet.

Current Increased Balance refers to the total amount you have to pay that includes penalties or
interest incurred by unpaid balance from a loan or payment you are supposed to have made but
were not able to do so on time.

As of this month’s cut-off date, the current total amount due from your purchases using your credit
card is ₱99,386.59. The minimum required payment is 5% of the total amount due. If you pay only
the minimum required payment, a financing charge of 3.4% of the remaining balance will be
charged to the next bill. Assuming you refrain from using your credit card on any of your purchases
for the next 3 months and the financing charge of 3.4% is charged every billing period, show your
expected monthly bill for the next 3 months.
Solution:
Given the current bill of ₱ 99,386.59, the minimum required payment is 0.05(99,386.59) = ₱
4,969.33. If only the minimum required payment is paid, then the remaining debt balance is
99,386.59 - 4,969.33 = ₱94,417.26. Assuming there are no credit bill transactions for the next 3
months and only the minimum required payment each month is paid, the table below shows the
monthly total amount due for each of the next 3 months.

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