Commercial Math

Commercial Math


Introduction

Commercial math focuses on those aspects of mathematics that are used in everyday life.

Consider an example;

Amy, your friend goes to a school supplies store to buy a notebook.

The shopkeeper tells her that 12 notebooks will cost $32.

She has to calculate the cost of 1 notebook. This requires an understanding of the unitary method.

Let’s take another example;

Ryan goes to buy a baseball bat with his mother.

One store offers him a 25% discount on the bat. The other shop offers a free ball with the bat.

Ryan wants to help his mother select the best deal. He should know how to calculate percentages and also understand the concept of discounts.

In both these examples, we make use of commercial math concepts.

You can go ahead and explore all important topics in Commercial Math by selecting the topics from this list below:

Money Profit and Loss
Ratios Simple Interest
Proportion Compound Interest
Percentages Discounts
Unitary Method Taxes

Money

Money is what makes the world go round, and mathematics is the centripetal force that governs it. From simple transactions to banking, taxes and discounts, everything that involves money, involves math!

Example:

sum of two 5 Rs. coins

adding few notes of indian rupee

Money is a medium of exchange. We pay coins and notes in order to get services and commodities. You can now learn more about the process of Identifying Denominations and the concept of Decomposing Money.


Ratio

A ratio tells us how much of the proportion of one thing to the other. The sequence (or order) in which the numbers in a ratio are written matters.

Example:

example of ratio

Let's go ahead and learn about the concept of Ratios.


Proportion

When two ratios are equivalent, they are said to be in proportion.

Example:

example of proportion

Check out the examples of Proportion to understand the concept better.


Percentages

Percent means “out of \(100\)”. If \(20\) out of \(100\) boxes are shaded, then we say that \(20\) percent or \(20%\) of the boxes are shaded.

Example:

example of percentages

 

You can now learn how to calculate Percentages and its applications with the help of examples.


Unitary Method

The unitary method, in essence, is all about finding the “per unit value”. The unitary method is a technique for solving a problem by first finding the value of a single unit, and then finding the necessary value by multiplying the single unit value.

Example:

example of unitary method

You can try solving some of the examples of Unitary Method to understand the methods used in solving such problems.


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).

Example:

formula of profit and loss

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.


Simple Interest

Simple Interest is the interest that is calculated on the Principal Amount on a monthly, quarterly, or annual basis.

Example:

formula for simple interest

Ever borrowed 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.


Compound Interest

Compound Interest is the interest that is calculated on the Principal Amount and the Interest that is obtained from the previous term.

Example:

formula for compound interest

Compound Interest is usually charged by banks and insurance companies on the amount of loan taken by us from them.


Discounts

Discount is a reduction in the price of a commodity. It is the difference between the selling price and marked price.

Example:

formula for discounts

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.


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.

Example:

A packet of homemade chocolates costs $50.  A sales tax of 10% is charged. What will be the total bill amount? 

Cost Price \(= $ 50\)

Service Tax \(= 50\times \dfrac{10}{100} = $5 \)

The total bill amount including taxes is

\[\begin{align} &= \text{Cost Price + Tax} \\ &= $50 + $5 \\ &=$55 \end{align} \]

You must have heard words like income tax, property tax, Medicare tax etc in daily conversations. Let’s now try and understand how Taxes are levied on products