Grade 10 Finance Growth Decay: How to Identify the Question Type

Grade 10 finance questions use only two formulas: simple interest/growth and simple decay. The instruction word and context tell you which formula applies and which variable you are solving for.

Type 1: Simple interest: finding the accumulated amount or interest

Trigger words: "Simple interest", "Calculate the interest earned", "Find the final amount"

Trigger structure: The word 'simple' appears, or a fixed annual interest rate is described as applying to the original amount only.

Do not confuse with: Compound interest: at Grade 10 only simple interest is tested. If you see 'compounded' in a Grade 10 paper, read more carefully.

Method (no numbers, just the steps)

Identify the formula: A = P(1 + in) or I = Pin
List: P (principal), i (interest rate as a decimal), n (time in years)
If the rate is given as a percentage, divide by 100
Substitute and calculate

Grade 10Paper 1Level 2, Routine Procedures

An advertisement offers: "Buy a Samsung J5 for only R229 per month. You have 24 months to pay. No deposit is required." 7.2 The monthly instalment, quoted in the advertisement, is calculated on a hire purchase agreement which charges interest of 7,5% p.a. on the cash price of the cellphone. Show that the price of the cellphone is R4 779,13.

Source: DBE Mathematics Paper 1, Grade 10, November 2018, Question 7.2

Common mistake

Using n in months instead of years, if the time is given in months, divide by 12 first.

See the progression: same type, increasing difficulty

Easy

R5 000 is invested at 6% per annum simple interest for 4 years. Calculate the interest earned.

Practice question: not sourced from a past paper.

Medium

R12 000 is invested at 8% per annum simple interest for 18 months. Calculate the final amount.

Practice question: not sourced from a past paper.

Hard

After 5 years at 4% per annum simple interest, an investment is worth R9 000. Calculate the original amount invested.

Practice question: not sourced from a past paper.

Type 2: Simple decay (straight-line depreciation)

Trigger words: "Depreciates", "Straight-line depreciation", "Loses value"

Trigger structure: An asset (car, machine) loses value at a fixed amount or percentage per year.

Do not confuse with: Simple interest: growth adds value, decay subtracts value. The formula structure is the same but with a minus sign.

Method (no numbers, just the steps)

Use the formula: A = P(1 − in)
Identify P (original value), i (depreciation rate as a decimal), n (years)
Substitute and calculate A (the remaining value)

Grade 10Paper 1Level 2, Routine Procedures

A car bought for R180 000 depreciates at 12% per annum on a straight-line basis. Calculate the value of the car after 4 years.

Practice question: not sourced from a past paper.

See the progression: same type, increasing difficulty

Easy

Equipment worth R40 000 depreciates at 10% per annum straight-line. Find its value after 3 years.

Practice question: not sourced from a past paper.

Medium

A laptop bought for R15 000 depreciated to R6 000 over 3 years on a straight-line basis. Calculate the annual depreciation rate.

Practice question: not sourced from a past paper.

Hard

A machine depreciates at 8% per annum straight-line. After how many years will it be worth half its original value?

Practice question: not sourced from a past paper.

Words like determine and hence appear throughout this topic, see the instruction word glossary for full definitions.