# Commercial Math

Commercial Math
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Commercial math deals with all those concepts that people use in their everyday life. The word commercial itself means the economical world or something relating to buying or selling. It involves the concept of profit and loss, discounts, marked price, simple and compound interest, taxes, ratio and proportion, percentages, and everything that revolved around money. Let's learn about commercial math and all its sub-branches in math in detail in this lesson.

## Profit and Loss

Profit is the gain that is incurred when the Selling Price (SP) of a commodity is greater than its Cost Price (CP). Loss is incurred when the Selling Price (SP) of a commodity is less than its Cost Price (CP). Profit and Loss are the basic driving forces of the market, and here you will understand how to wield the power of mathematics and apply it to the commercial world.

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## Simple Interest

Simple Interest is the interest that is calculated on the Principal Amount on a monthly, quarterly, or annual basis. Ever borrow money from a friend or relative and they said that you would have to return the amount after a year with 10% interest? The concept of Simple Interest will help you easily calculate the total amount you would need to repay them.

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## Compound Interest

Compound Interest is the interest that is calculated on the Principal Amount and the Interest that is obtained from the previous term. Compound Interest is usually charged by banks and insurance companies on the amount of loan taken by us from them.

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## Discounts

Discount is a reduction in the price of a commodity. It is the difference between the selling price and market price. Discounts are probably the most frequent terms that come up during a shopping trip or any purchase that we make since they directly affect the amount of money involved.

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## Taxes

The government charges a fee on every item that is sold. This fee is meant to be spent on public welfare and is known as tax. The tax charged is always a percentage of the SP. You must have heard words like income tax, GST, service tax, etc in daily conversations. Let’s now try and understand how Taxes are levied on products.

Example: A packet of homemade chocolates costs $50. A service tax of 10% is charged. What will be the total bill amount? Solution: Cost Price=$50

Service Tax= 50 × 10/100 = $5 The total bill amount including taxes= Cost price + Tax =$50 + $5 =$55.

## FAQs on Commercial Math

### What is Meant by Commercial Mathematics?

Commercial mathematics is a branch of mathematics that deals with the concepts used in businesses like simple and compound interest, profit and loss, taxes, loans, percentages, etc.

### What do you Learn in Commercial math?

In commercial math, learners usually deal with the computations involving profit, loss, interest, loan, taxes, percentages, averages, etc. They learn these concepts in detail both in terms of their real-life applications and use.

### How can I Improve my Business/Commercial Math?

One can improve her/his commercial math by practicing quick addition and subtraction. We should be thorough with the concept and formulae of all the topics in commercial math to ease out our calculations.

### Why do I Need to Study Commercial Mathematics?

Commercial mathematics is not only used by business organizations but common people also have to use it in their day-to-day life. Whenever we go to the market to buy something, we have to perform some arithmetic operations or do specific calculations like percentages, discount, average, profit/loss, etc to calculate the amount we have to pay. So, there we should have an understanding of commercial math.

What is the Difference Between Maths and Business Maths?

Math is a much broader concept that includes everything about numbers. It includes various branches like algebra, geometry, calculus, etc. Commercial or Business math is one of the branches of mathematics. Commercial math deals only with topics related to our financial world like profit and loss, interest, etc.

## Solved Examples on Commercial Math

Example 1: If Emma borrowed a sum of $40500 for a period of 21 months at 20% per annum, how much simple interest will she pay? Solution: The principal amount is$40500 and the rate of interest is 20% = 20/100. The time period given is 21 months = 21/12 years. Using the formula for interest I= P×R×T; I= 40500 × (20/100) × (21/12), so I= $14175. Therefore, Emma is going to pay$14175.

Example 2: David bought a new cell phone for $90. The value of the phone decreases by 3% on its original price every year. Find the value of his mobile after 3 years. Solution: 3% of 90 is:$2.7. The phone depreciates by $2.7 every year. Thus, the value of the mobile after 3 years will be: 90 - (3×2.7) =$81.9

Therefore, the value of the mobile after 3 years will be \$81.9

## Practice Questions on Commercial Math

Here are a few activities for you to practice. Select/Type your answer and click the "Check Answer" button to see the result.