1.Mathematical Literacy 3

2. Module 2: Deal with finances in personal and/or familiar contexts as well as in the workplace 3. Module 2: Deal with finances in personal and/or familiar contexts as well as in the workplace

After completing this outcome, you will be able to:

• Manage finances with confidence

• Read, interpret and act on financial information presented in documents

4. 1. MANAGE FINANCES AND FINANCIAL INFORMATION WITH CONFIDENCE

At the end of this outcome, you will be able to:

• Identify, record and manage sources of income

• List and manage expenses

• Plan and monitor finances

• Read and identify information from documents and complete the documents

• Make and explain decisions using documents

5. Income and expenditure

Incomeis money that comes in.

This is the money earned by selling goods and services.

Examples

• Sales i.e.selling price minus the buying price of items.

• Services rendered i.e. the payment for services rendered.

• Interestearned e.g. on bank accounts or other investments.

• Rental i.e. monthly fees received from the rental of property.

• Donations or grants i.e. money given to the business without expecting any return.

• Salaries, wages and commission when you are the employee.

6. Income and expenditure

Expenses / Expenditure represent/s money spent which can beorganised into budgets.

Examples

• Salaries/wages.

• Commission.

• Money spent in order to continue operating i.e. running expenses e.g.rental of premises, payment of salaries, water and electricityinterest paid on loans,taxes.

• Raw materials/stock/products.

• Investment/savings.

7. Gross income and net income

When you read a job advertisement, you must remember that thegross salary or wagementioned in the advert, is not what you will take home.There are deductions to be made by the employer .For a wage worker there will be an unemployment fund subtraction at 1% of earnings as well as tax subtraction of e.g. 25% of earnings the % dependent on the total yearly earnings.

The amount that you actually receive, is called the net income.

For a business the net income is called the profit

8. Fixed expenses/income

Fixed costs of a firm are the amounts thathave to be paid even though no profit is made . Fixed costs are costs that are consistently the same each month.

Fixed costswill not change if output/productivity increases .

Fixed income is an amount that remains the same each month or an amount paid on a regular basis such as a monthly salary.

Examples

• Fixed costs to an individual:rent paid per month, fixed repayments on a loan or on a hire purchase agreement .

• Fixed costs of a business are sometimes called overheads, and are e.g.contractual payments for building or equipment, rental, interest payments on debts, salaries of long-term employees, repayments.

9. Variable income / expenses

Variable costs for a businessvary with the level of output e.g. if you make more chairs you need more wood

Variable income is when the income amount from a specific source varies eachmonth.

Examples

• Variable costs of an individual are:services such as electricity, water & sewerage; haircuts, entertainment, food . (These costs are fixed in the sense that they are there every month but variable in the amount payable per month).

• Material or salaries, required to produce whatever item is being made, such as steel to manufacture cars, or workers to staff the production lines, fuel, light, and power to operate factories (raw materials, wages and fuel).

• Commission and tips that a waitress/waiterreceives are variable from one day to the next never quite the same

10. Activity 1

1. Identify items of expenditure and revenue from the following list

11. Activity 1

Distinguish between fixed and variable income/cost items:

12. Activity 1

Identify which words on a bank statement mean income (credit) and expenses (debit)

13. Activity 2

1. With the table of transaction costs, calculate the tariffs for the following transactions:

a. How much will it cost to withdraw R800at a Saswitch ATM?

b. How much will it cost to withdrawR800 at the ATM of your bank?

c. How much will it cost to withdraw R10 over the counter inside the bank?

5,50+2,80+7,20=15,50 15,50 5,50 = 10,00 R25 14. Activity 2

Bank statement on a current account of Ashley Abrahams at Wonder Bank.

• Identify items of income and expenditure.

• Complete the balance column.

• Calculate the bank fees from 4 thJuly to 25 thJuly.

Total bank fees from 4 thJuly to 25 thJuly=97,26 Income = the internet transfer of 15000 Expenditure to= TH Motors; Auto electric costs; Christelles account;Bank account; Multichoice rental; and two cash withdrawals 15. 14100,00 13900,00 13400,00 12400,00 12180,00 16. Activity 2

Table of possible bank costs / charges

17. Activity 2

a. Which bank offers the best interest rate p.a.?

b. At which bank is it the easiest to open an account?

c. You want to withdraw R400 cash at the ATM of a bank that holds your account. Calculate the cost at each of the five banks.

d. Do the same calculation as in c. if the ATM is non-functional when you arrive at the bank, and you have to go inside the bank to withdraw at the teller.

e. Which bank would you advise a friend to go to?Explain your answer.

Bank A offers the best interest rate p.a. Bank A Bank A: R1,80; Bank B: R6,40; Bank C: R7,05; Bank D: R6,40; Bank E: R4,70 Bank A: R1,80; Bank B: R19,60; Bank C: R19,80; Bank D: R10,67; Bank E: R19,85 My friend should go to Bank A as it has a higher interest rate, a lower entry fee and lower bank costs 18. Case study 1

Remember Noluthandos Little Laundry from Module 1?

Study her financial situation as laid out in the bank statement below, and then answer the questions that follow.

WONDER BANK Limited Bank statement from: 17 / 05 / 09

23 Factory Road to : 31 / 07 / 09

BIESIESFONTEIN5066

Savings Account:

Ms Noluthando Mkize

Apartment 67

Biesieshof

BIESIESFONTEIN5061

19. 20. Case study 1

She has a savings account which gives her 7% interest p.a.

Help her with her bank statement.

For the bank statement, list the debit items (funds out) and the credit items (funds in). Complete the balance column.

b. Explain what CR interest means. Show how to calculate the R111,44

c. Calculate the other interest amounts i.e. on 30/06/09 and on 31 /07/ 09

d. On which of the listed expenses did she spend some of her cash withdrawals?

e. Has she paid her utilities account for July yet?If not, until what date does she have time to pay it?

21. 22. Case study 1

Explain what CR interest means. Show how to calculate the R111,44

CR interest means credit interest. 23. Case study 1

c. Calculate the other interest amounts i.e. on 30/06/09 and on 31 /07/ 09

7% interest p.a.= 0,019178 % interest per day (7 divided by 365) Final amount=38687,23(The 15 is for the fifteen days up to 31/05/09) = 38799,04 Therefore, the interest = 38799,04-38687,23 =111,81 (A scientific calculator gives R111,44) CR interest on 30/06/08 = 121,73FA = 21113,27(1+9.00019178) 30= 21235,00 CR interest on 31/07/08 =FA=25873,60(1+0.00019178) 31= 26027,87 Interest amount=26027,87-25873,60 = 154,27 (154,16 with simple calculator). 24. Case study 1

On which of the listed expenses did she spend some of her cash withdrawals?

Has she paid her utilities account for July yet?If not, until what date does she have time to pay it?

On soap powder to do the washing. No, she has not.She has until the 7 thof the month.If the 7 thfalls on a week-end she has until the Monday 25. Assignment 1

Compare the costs of the following transactions at two local banks:

• Internet transfer of R25 000.

• Withdrawal over the counter of R30 750 to pay wages of employees.

• Stop-order on a monthly payment of R6 500.

• ATM cash withdrawal of R1 000 at a SASWITCH terminal.

• Monthly administration fee.

• Cheque made out for R27 000.

26. Records

Source documents

• Sales documents

• Purchase documents

• Banking documents

27. Activity 3

T. Jantjies of T.J. Motors has employed a mechanic.His monthly pay-slips look like this.

28. Activity 3

What is Ashleys birth date?

Does he receive a 13 thcheque?

What % tax does he pay?

What % UIF does he pay?

5. Get a bank deposit slip from your bank and fill it in for A. Abrahams depositing his salary into his savings account with account number 822 82826665 which is held at the Hatfield branch in Tshwane.

90 thJune 1974 No, because 5020,83x12=60249,9618% tax, calculated 903,75 5020,83 x 100 1% UIF 29. Case study 2

The questions concern the car repair business of Mr. T. Jantjies of the address:

T.J. Motors

26 Industrial Road

VANGUARD 2357

You might be a secretary, office worker, the wife of the owner, the owner himself or one of the mechanics working for Mr T. Jantjies.

When the work has been completed on a car, you must write out an invoice which is given to the customer.

The invoice is a document which informs the client what he has to pay and why, i.e. for what.

Invoices are made out in duplicate, and one copy is given to the client/customer.

When the customer has made the payment you can give him a receipt, i.e. documentary proof that an amount has been received by the business.These receipts are pre-printed and have to be numbered or might be pre-numbered as well.Receipts are completed in duplicate.The original is given to the customer as proof of payment whilst the copy remains in the receipt book.

The money then has to be deposited into the bank account of the business.A bank deposit slip has to be filled in.

30. Activity 4

The following work has been done on a Ford Sapphire with registration number CW 21439 for a Ashley Abrahams on 2 ndOctober 2008:

Differential and side shafts replaced; tow bar removed before and replaced after work on differential completed; check for any other related problems; road test done.

The labour was calculated as R650,00.

The cost of new or second-hand replacement parts: differential R1 280,00; side shafts (left and right complete) R2 300,00; differential oil R120,00; shock absorber supplies R8,85; bolts and nuts R4,95; extra oil R12,00.

It is invoice no. 235 of this business.

Complete the invoice below.Calculate the VAT at 14%.

31. Mr. Peter Smith 235 2 ndOctober 2006 Ford Sapphire CW 21439 Remove and replace tow bar Differential parts 1 280 00 00 00 00 Remove and replace side shafts Side shafts Work on differential Oil 120 2 300 Check for other problems Shocks supplies 8 85 Road test Bolts and nuts 4 95 R650,00 3 725 80 4 375 80 612 R650,00 61 4 988 41 32. Activity 2

2. The customer pays R1 000,00 by cheque when collecting the car.He requests to pay the outstanding amount in payments of R1 000 per month.The number of this receipt for the business is 428.

Complete the receipt below for the customer for the first payment.

33. 2 ndOctober08 428 Mr Ashley Abrahams One thousand0 1 00000 T.Jantjies 34. Activity 4

At the end of the month you have to send Mr. Peter Smith a statement of account mentioning the balance, the amount currently payable and the time limit for the payment within the next 30 days.Fill in this statement of account below.

35. Mr. A Abrahams 3rd October 2006 3 725-00 2/10 Receiptno.428 R1 000-00 31/10 Invoice 1 000-00 2 725-00 2 725-00 1 000-00 36. Activity 4

4. You have to deposit the money received during the week in the bank.

Apart from the payment received in question 1, the business has also received:

a. 3 October 2008 cash payment of R450,00 for the replacement ofa battery, received from Mr. L. Botha.

b. 4 October 2008 Wonder Bank (254/21 branch cd.) chequepayment of R685,00 for replacement of a faulty carburettor,received from Mr. P. Venter;

c. 4 October 2008 cash payment of R250,00 for repair of analternator, received from Mr. V. Wilson;

d.5 October 2008 Best Bank (326/89 branch cd.) cheque paymentof R3 000,00 for replacement of top gasket of a Jetta, receivedfrom Mr. T. Sihlalo.

37. 700 3685 00 00 R4385.00 38. Activity 4

The business has to pay its monthly rental of R2 500,00 to Precise Properties at the beginning of each month. Make out the cheque for this payment on the 3rd October 2008

39. Precise Properties 3 rdOctober 2008 thousand five hundred rand only 2 500 00 T Jantjies 40. Activity 4

Also fill in the cheque sub for the cheque in number 4. Start of with a balance of R10 000

3/10/08 Precise Properties Monthly rental 10 000-00 1 450-00 11 450-00 2 500-00 8 950-00 0-00 8 950-00 41. Activity 4

Make a record of all receipts and payments of the one week for T.J. Motors in this simplified page of a cash bookReceipts are entered on the left hand side.

42. 43. Activity 4

8. The following happens on the 4 thOctober 2008:

You need R200,00 in petty cash for the running of your day-to-day expenses in

the office.You withdraw this money in cash from the ATM. You also have to buy parts from H & H Spares to the value of R3 500,00 for work to be done on the alternator a car. You have to buy petrol from Valley Gas Station to the value of R300 for daily collection ofparts.

a. Complete the cheques and the cheque stubs for these twopayments.

b. Add these payments to the cash payments side of the cash book ofthe previous question.To fill in the VAT amount and chequeanalysis (VAT exclusive amount) you will have to calculate whatthe VAT amount was for the cost of the alternator.Petrol isexempted from VAT.

44. Auto Parts Ltd 7 rdOctober 2008 Nine hundred and ninety nine rand and sixteen cents 999 16 T Jantjies 45. 3/10/08 Auto Parts Ltd Motor Parts 5395-00 3000-00 8395-00 999-16 7395-84 0-00 7395-84 46. Activity 4 H&H Spares 4/10/2008 Three five zero zero RandOnly3 500 00 T Jantjies 47. Activity 4

9. Compile the bank statement on the cheque account of the business. Take the balance bought forward to be R9 000.00

48. 49. Activity 4

10. The following work was done by T.J. Motors on 9th October 2006:

The work was done on a 1984 Passat CLI with registration no. CJ 87663 for Mr. L. Dlamini. The starter motor was removed, repaired, replaced and tested. Spares bought for this costR320,81. Battery terminals were repaired. Subsequently it was found that the battery had to be replaced. The cost of a new battery was R406,69. Voltage regulator was replaced at a cost of 148,96. All the work done was tested. All parts were bought from Auto Parts Ltd. The total amount for labour was R185,00.

• Write an invoice to the owner of the car for this work.

• At the months end write out a statement of account for the balance of the payment. The customer paid R900,00 on the 9th October.

• List the items of disbursement to third parties (expenses) by Mr. Jantjies during the job.

• Write out a cheque to Auto Part Ltd. for the items of disbursement (bought spares) for the job done. You still have to add the VAT to the total amount for the parts.

50. Mr L. Dlamini 236 9 ndOctober 2006 Passat GLX 84 CJ 87663 Starter motor repaired and tested Starter motor spares 320 81 69 96 Battery terminal replaced Battery Battery replaced Voltage regulator 148 406 Voltage regulator replaced All work tested R185,00 876 46 1061 46 148 185 60 1210 06 51. Savings

Tips on saving:

• You have to start saving at a young age ifpossible.

• Save R10 out of every R100 that you earn, i.e. 10%.

• Compare the interest rates on the savings accounts of different banks and use the bank with the best/highest interest rate.Check that you have enough money in the bank to actually earn that interest rate.Place your savings into this account every month.

• Never use a micro loan business.They make their living from charging extremely high interest rates on the money loaned to you.

• Do not borrow money if not absolutely necessary.The high interest charged will destroy you financially.

• Do not ever be tempted to get a credit card. The extremely high interest rates on this kind of debt will destroy you.

• Do not ever buy on hire-purchase.Save the cash and buy cash.

• Earthly possessions are rarely worth going into debt for.Live a little bit more calmly, i.e. do not try to keep up with the neighbours, or go for brand name clothes, or eat out frequently.

52. Interest

Do you remember how to calculate compound interest?

Lets start with simple interest:

If a man borrows R100 for 5 years at an interest rate of 5%.In other words, he has to repay the moneywith interestafter 5 years.

Interest charged at 5% (i.e. 5/100), means that for every R100, he will have to pay R5 extra as interest per year.

This interest for one year is calculated as follows:

5% of initial amount

=5/100 x R100

= R5: He will have to repay R105 after the first year

5/100 of the initial amount, i.e. (0,05)(100), which equals R5.He will have to repay R105.

Total repayment after 5 years:

5 x R5

= R25 : He will have to repay R125 after 5 years

53. Interest

The formula for simple interest will be:

Simple interest = P x T x r/100

Where: P:initial amount

T:number of years

R:interest rate

54. Interest

Final amount: A = P(1+r/100) n

(r= interest rate p.a.;n= number of periods and P = initial amount.)

This above formula amounts to the same as calculating simple interest step by step. Calculate it for the example just done for two years to check on the answer of R110,25.

55. Case study

Twin brothers each have R1000 per year extra in their pockets from the age of 19.

They can either invest this at 8% p.a. compound interest, or just spend it.

Brother A saves his money each year until he is 29 years old, and then decides to rather spend the annual R1000.However, he does not touch the money already in the bank which continues to grow at a compound interest rate of 8% p.a.

Brother B does the opposite he squanders the money for the first 10 years and then decides to start saving. He does this for the next 36 years.

Calculate who will have the most money at the age of 65.Use a monthly compounding of the interest.

Plot two curves on the same set of axes to illustrate the growth of their nest eggs. Use time on the horizontal axis and amount of money in the bank on the vertical axis.

56. Case study

Twin brothers each have R1000 per year extra in their pockets from the age of 19.

They can either invest this at 8% p.a. compound interest, or just spend it.

Brother A saves his money each year until he is 29 years old, and then decides to rather spend the annual R1000.However, he does not touch the money already in the bank which continues to grow at a compound interest rate of 8% p.a.

Brother B does the opposite he squanders the money for the first 10 years and then decides to start saving. He does this for the next 36 years.

Calculate who will have the most money at the age of 65.Use a monthly compounding of the interest.

Plot two curves on the same set of axes to illustrate the growth of their nest eggs. Use time on the horizontal axis and amount of money in the bank on the vertical axis.

• Brother A: Approx R230 000 (depending on assumptions)

• Brother B: Approx R203 000 (depending on assumptions)

57. 58. Financial statements

We have already seen that in the running of a household, a shop or any business, all activities should be recorded financially.

Financial information has to be grouped together in a logical order for the householder/owner/manager/overseer to make an intelligent assessment as to whether finances are healthy (in the black).

This logically ordered financial information, rendered at scheduled intervals, is called a financial statement.

There are two basic parts to a financial statement, the income statement and the balance sheet.

59. Income statement

The income statement provides information regarding the profitability of the business over a specified period.This statement indicates the income and expenditure of the business and therefore the profit (net income) and loss.

A basic income statement should:

• group together all the income items and total them,

• group together all expense items, total them,

• deduct the total expenses from the total income to indicate the net income/profit or the loss/deficit for the period.

60. Balance sheet

The balance sheet shows at a specified point in time:

• what a business owns, also called the assets of the person or business,

• and what it owes, also known as debts to other people, or as the liabilities of the business.

• Therefore, the balance sheet reflects the financial position of a business at a certain date

61. Examples

Income statement of anaveragemonth for Sams Car Wash Business

Income:

Services rendered 2015-00(5 days per week, 5 cars per day)

Interest earned 7-00(on a savings account opened) ________

2022-00

Less expenses: 90-00(business expenses for the month)

Soap 20-00

Brush, bucket and cloths 45-00

Polish 25-00 ( only three cars polished, fee R30 )

Net income 1932-00

62. Examples

Income statement of anaverageweek for Beverley:

(Beverley makes fudge and sells from door to door.)

Income:

Fudge (sold @ R4,50 per three pieces) R135-00

Less expenses: R76-00

Condensed milk R36-00

Butter and sugar R40-00

Net profit: R 59-00

63. Examples

Income statement of anaverageweek for Beverley:

(Beverley makes fudge and sells from door to door.)

Income:

Fudge (sold @ R4,50 per three pieces) R135-00

Less expenses: R76-00

Condensed milk R36-00

Butter and sugar R40-00

Net profit: R 59-00

64. Activity 6

1. Using the income statement of Sams parents, a budget can be worked out for a projected income of R7 550 per month.

• Calculate the total budgeted expenditure.

• Calculate the total expenditure for the month of April.

• Calculate how much Sams parents had left in April for entertainment.

• Calculate the percentage that each expense item constitutes with respect to the total expenditure.

• Calculate the variance amounts between the budgeted amounts and the expenses for April. State whether the variance is positive or negative.

• Calculate the percentage variance for each expense item(state positive or negative.)

65. 7556-00 7385 210 27,13% 5,29 3,51 6,35 3,97 3,51 3,31 1,93 37,72 3,31 3,97 0 0 0 0 -5 +80 +150 -54 -350 -50 0 0 1.89% 16.67% 0 0 60% 36.99% 12.28% 20% 66. Activity 6

2. Prepare an income statement using the following figures for the year 2001 from the business of J.J. Dampies who is a builder:

Services rendered R590 000;Salaries R48 000;Telephone R7 000; Interest received R5 000; Rent paid R12 000; Transport costs R8 000;

Stationery R3 000; Building materials R300 000.

67. Income: Services rendered 590000 Interest received 5000 595000 Expenses: Salaries 48000 Telephone 7000 Rent paid 12000 Transport costs 8000 Stationery3000 Building materials 300000 378 000 Net income: 217000 68. Activity 6

Make a list of all items that need to be considered expenses in your chosen line of work.

69. Studying the income statement

Identify and concentrate on pertinent totals before getting involved with details.Start at the bottom line does the income statement show a profit or a loss?

Next, assess whether it is an acceptable profit. Alternatively, if a loss was made, was this expected?

Next, look at the total income, then at the total expenses, and do a quick mental calculation to ascertain whether these are the two figures that have resulted in the net profit or loss.

Proceed to examine the individual income and expense items.

70. Comparing financial results

Financial results can be judged against:

• industry standards,

• the previous years financial information,

• goals (budgets) set at the beginning of the financial period.

The actual income and expenditure items can also be compared to previously prepared budget figures - a variance is obtained by deducting one number from the other.This could be for a month, or for any other chosen period.Managers can look for the reasons for these variances and take corrective action e.g. the fact that the actual rent received is less than budgeted, could be because of a tenant being in arrears or a building being vacant.

71. Activity 7

The annual budget is presented by the Minister of Finance at the end of February of each year.The first table gives the main features of the National Budget of 2005/2006 as delivered by the Minister of Finance at the end of February 2005.The second table is from the Sunday Times of 24 thFebruary 2008.

• Study the two tables and conclude what is meant by a billion.

• Why are two years attached to each year?

• What do the sections other and payment of interest mean?

• Calculate the variance (difference) between the amounts for 2007 and 2008

• Calculate the % variance 2007 to 2008.

• Calculate % expenditure on each item of the 2008 budget.

Each figure in the table should actually be multiplied by 1000000000 The financial year runs from 1 stMarch to the last day of February of the next year. Other = smaller sections of expenses grouped together Payment of interest = interest on money owed 72. 73. 8332 1861 4167 936 1369 42766 15341 5323 13095 2414 4602 22000 781 1394 479 70 16290 5912 5426 78523 812 6000 83711 9,6% 6,5% 10,8 8,4% 15,7% 13,7% 14,5% 7,8% 14,2% 19,5% 13,9% 15,4 4,9% 19,8% 3,9% 2,5% 29,6% 12,3% 15,6% 13,6% 1,5% 100% 13,2% 13,3% 4,2% 6,0% 1,7% 1,4% 49,5% 16,9% 10,5% 14,7% 2,1% 5,3% 23,1% 2,3% 0,8% 2,0% 0,4% 10,0% 7,6% 5,6% 91,5% 7,7% 0,8% 74. Case study 5

Your friend plays the role of Noluthando and you are her accountant, Sipho.

Noluthando is anxious about her finances and asks you to compile a budget for her.

From the information in Module 1 Case study 2 as well as from the income statement in Case study above, you know:

• how much money she has as an opening balance, and

• how much she earns on average per month.

1. You arrange a meeting with her to discuss her expenses.You discuss a list of possible expenses with her certain of the expenses might not be applicable to Noluthandos situation.The two of you have to fill this list in. She tells you that she spends on average R900 per month on food and household goods.Cost of soap powder must still be added to this.Her monthly rental is R950.At present she is not spending anything on clothing, entertainmentand she is not paying school fees.She has no insurance policies or medical costs. She spends about R200 per month on cell phone air time.

75. 5450,00 950,00 800,00 618,27 200,00 900,00 3468,27 1981,73 76. Case study 5

2. Noluthandos role now changes to that of your personal assistant as accountant.Together you have to complete the table.

This how to do it:

• Calculate the % interest charged on the final amount, e.g. for a loan amount of R8000 the final payment amount (24-month / option A) will be 551 x 24=R13224.This is R5224 more than the loan amount of R8000.Therefore the % charged for this choice of repayment is52248000x100=65,3%

• For Noluthandos amount of R29000 you have to calculate 65,3% of 29000=18937 which will amount to R47937 which she eventually will pay for the car apart from the initial deposit of R10000.Divide the R47 937 by 24=R1997,38per month is her installment amount.

77. 391,67 397,33 281,27 287,20 16530465,63 496,67 443 351,58 359 1033,13 698,44 664,50 527,38 1721,88 897,50 1107,50 1241,67 78. Case study 5

Back to Noluthando.You show her the table that you have compiled of various lending options for24-month and36-month periods.You ask her how much she is prepared to give as monthly installment for the remaining R30000 owed on the car.

Add this amount to her budget.

A wise decision would be R1419,79 which would mean that she has some money to spare for any possible emergencies.She would then repay the loan in 24 months and it would cost her 1419,79 x 24 = R34074,96 which is 5074,96 more than the R29000. 79. Case study 5

Adapt her budget if she is in the red, i.e. make a plan for her.

She is not in the red. 80. Assignment

Ask around either in the class, amongst fellow-learners or at a business, to find someone who has knowledge of these contracts.

Find out:

• What kind of information is necessary to be accepted as a contracted person?

• Is it possible for a furnishing store to re-possess/take back furniture that you buy under a hire-purchase agreement?Explain.

• If the store does re-possess the bought item, what happens to the installments that you have already paid?

• Which is better for a contracted person: to pay smaller or larger amounts per month?

• What maximum % is a loan-business allowed to charge you?

• If you have signed a rental contract for a flat for 24 months and you have to move out of the area, what can you do to prevent having to continue paying the monthly rental amount?

• Did your friend read the fine print?If so, what did it say?If your enquiry is directed to a store, ask them what is in the fine print

81. Activity 9

Look at the table for cell phone rates:

82. Activity 9

Explain the words peak ,off-peak and happy hour.

Is it cheaper to quickly phone (45 seconds) or to send an SMS?

Peak is when there is a peak or surge of calls i.e. when most people want to make calls.Off-peak is when few people call e.g. at midnight.Happy hour is between the peak and the off-peak time around 18h00. SMS is much cheaper than any phoning. 83. Activity 9

During one month you make the following calls:45 calls from cell phone to cell phone of which 30 are orders placed which last on average two minutes each, and 15 calls from cell phone to land-line.Nine of the latter calls last about 5 minutes (peak time) and the rest take 7 minutes each (off-peak).All of the business calls are in peak time. You also used happy hour rates for 22 calls to family and friends, talking on average 10 minutes per call.You send about 100 SMSs during the month.Calculate your cell phone cost for the month.

30 x 2 x 1,80 = 108 9x5x2,20 = 99 6x7 x0,97 = 40,74 22 x 10 x 1,49= 24,50 70x0,35=24 Total amount=R624,04 84. Summative assessment

Noluthandos daughter. Thumeka, decides in February to start a small tuck shop on the premises of the Little Laundry.

Her mother agrees that she can use a table and cool box to put the drinks and ice in.They live five houses from the local clinic.In addition the learners of a local high school all pass the Little Laundry during the school term.Therefore, she expects to do good business.

She has saved R850 from doing waitressing at a local restaurant and will use this money to start her small business.

85. Summative assessment

Separate toffees/lollipops/boiled sweets (bought in big bags, sold separately):lollipops cost R15 for 50;boiled sweets cost R25 for a bag of 250; toffees cost R80 for a bag of 100

Potato crisps and cheese curls, 30g packets cost R19 for 50 packets

Assortment of small chocolate bars about R120 for 45 bars

Tennis biscuits cost R48 for 24 packets

Tins of carbonated drinks cost R48 for 12 tins

250ml containers of fruit juice this costs R235 for a box of 200

Bananas cost R3,99 per kg and there are about 4 bananas per kilogram

Apples cost R7,95 per kilogram and there are about 5 apples per kilogram

Oranges cost about R4,99 per kilogram and there are about 3 oranges per kilogram

Matches a packet of 12 boxes cost R5,00

Two different brands of cigarettes the one kind costs R22,00 per packet and the other costs R29,50 per packet

Ice costs R3,50

She decides to increase all prices by 40% and to round off to the nearest 5 cent, i.e. 80c will be charged as 90c17c will be charged as 20c and 13c as 15c.

86. 87. Summative assessment

Calculate the expenses and income.

88. 89. Summative assessment

2. What is her profit?

Total profit = 1023,42 84,90 (i.e. the two negative items) = 938,52 90. Summative assessment

Her business goes very well and she has no time before the end of the month to visit the bank.She therefore has the whole months income in her pocket when she goes to the bank with Noluthando on the last day of the month.She has to apply for a savings account.Decide which bank to use look at the table of bank charges. Get a bank loan application form for her and fill in the form.

Fill in the deposit slip

Explain to Thumeka which documents she should keep and why she should do this.

91. Summative assessment

6. Thumeka needs you to help her save on phone costs.

Advise her at what time of day to phone.Work out how much her cell phone account (43 calls each lasting about 1,5 minutes) will cost her in peak and off-peak times.

Cell to cell: Peak time 43 x 2 x 1,80 = 154,80 Off-peak time 43 x 2 0,97 = 83,42 Off-peak phoning will save her 71,38 Cell to land-line: Peak time 43 x 2 x 2,20 = 189,20 Off-peak time 43 x 2 x 0,97 = 83,42 Off-peak phoning will save her 105,78