NCV 4 Mathematical Literacy Hands-On Support Slide Show - Module 3 Part 1


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This slide show complements the learner guide NCV 4 Mathematical Literacy Hands-On Training by San Viljoen, published by Future Managers Pty Ltd. For more information visit our website

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NCV 4 Mathematical Literacy Hands-On Support Slide Show - Module 3 Part 1

  1. 1. Mathematical Literacy 4
  2. 2. Module 3: Finances in the workplace and other areas of responsibility
  3. 3. Module 3: Finances in the workplace and other areas of responsibility <ul><li>After completing this module, you will be able to: </li></ul><ul><ul><li>Manage finances with confidence </li></ul></ul><ul><ul><li>Read, interpret and act on financial information presented in documents </li></ul></ul>
  4. 4. 1. Income and expenditure <ul><li>What is income? </li></ul><ul><li>What is expenditure? </li></ul><ul><li>What are fixed costs? </li></ul><ul><li>What are variable costs? </li></ul>
  5. 5. Activity 1 <ul><li>Identify items of expenditure and revenue from the following list: </li></ul>
  6. 6. Activity 1 <ul><li>Distinguish between fixed and variable income/cost items and which of these are irregular (tick the correct column/s): </li></ul>
  7. 7. Activity 1 <ul><li>Identify which words on a bank statement mean income (credit) and which mean expenses (debit): </li></ul>
  8. 8. Activity 1 <ul><li>Find out the meaning of the word dividend and explain whether it is an expense or income item </li></ul>
  9. 9. 2. Taxes <ul><li>Tax </li></ul><ul><ul><li>Is a compulsory payment to the government without any prospect of a direct benefit for the payer </li></ul></ul><ul><li>Remuneration </li></ul><ul><ul><li>The amounts of gross income that you receive which are subject to employees income tax </li></ul></ul><ul><li>Income tax </li></ul><ul><ul><li>The taxable income of individuals and companies </li></ul></ul><ul><li>Value-added tax </li></ul><ul><ul><li>Value-added tax is paid to the receiver of revenue by each stage of the production process, however each stage except the end-user can claim back VAT </li></ul></ul><ul><ul><li>VAT is short for Value-Added Tax </li></ul></ul><ul><ul><li>VAT is set at 14% </li></ul></ul>
  10. 10. Activity 2 <ul><li>What is meant by tax threshold? </li></ul><ul><li>From the tax table, calculate the amount of tax owed to SARS by a person with an income of: </li></ul><ul><ul><li>R90 000 per year </li></ul></ul><ul><ul><li>R125 000 per year </li></ul></ul><ul><ul><li>R350 000 per year </li></ul></ul><ul><ul><li>R48 000 per year </li></ul></ul><ul><ul><li>R500 000 per year </li></ul></ul><ul><ul><li>R280 000 per year </li></ul></ul>R0 R33 200 R122 210 R0 R223 010 R97 710
  11. 11. Activity 2 <ul><li>Complete the following VAT table: </li></ul>
  12. 12. Activity 2 <ul><li>4. Sin tax 2008 </li></ul>
  13. 13. Activity 2 <ul><li>Sin tax 2008 </li></ul><ul><ul><li>Interpret the information in the table in a few sentences </li></ul></ul><ul><ul><li>Obtain the average price for the different products and then calculate the price increased with regard to the product price </li></ul></ul><ul><ul><li>What do the arrows in the second column indicate? </li></ul></ul>
  14. 14. Activity 2 <ul><li>Find out what skills development levy means and then answer: </li></ul><ul><ul><li>Does SDL concern a private person or a business? Business </li></ul></ul><ul><ul><li>Is it an income or an expense item? Expense </li></ul></ul>
  15. 15. Activity 2 <ul><li>The Sunday Times reported on 24 th February 2008 reported that tobacco tax rates in South Africa increased 250% during the 1990’s to just under 50% of the retail price. They also reported that cigarette consumption fell 5% to 7% for every 10% increase in the price of cigarettes, resulting in a sharp decline in consumption, with the largest decrease among the youth and the poor. The report indicated that consumption had decreased from close to 2 billion packs of cigarettes in 1990 to 1,3 billion in 2005. </li></ul><ul><ul><li>Draw a bar chart of the percentage rise in cigarette price against the average percentage fall in cigarette consumption. </li></ul></ul><ul><ul><li>Get the prices of five different kinds of cigarettes and draw up a table with these prices and the amount of tax in the retail price. Use the 1990 figure of 50%. </li></ul></ul>
  16. 16. 3. Bank accounts and bank charges <ul><li>Bank accounts: </li></ul><ul><ul><li>Current account </li></ul></ul><ul><ul><li>Savings account </li></ul></ul><ul><ul><li>Fixed deposit account </li></ul></ul><ul><ul><li>Interest rates </li></ul></ul>
  17. 17. Activity 3: Bank charges <ul><li>With the table of transaction costs from one of the large banks, calculate the tariffs for the following transactions: </li></ul><ul><ul><li>How much will it cost to withdraw R800 at a Saswitch ATM? </li></ul></ul><ul><ul><li>How much will it cost to withdraw R800 at the ATM of your bank? </li></ul></ul><ul><ul><li>How much will it cost to withdraw R10 over the counter inside the bank? </li></ul></ul>R15,05 R10.05 R17.50
  18. 18. Activity 3 <ul><li>Bank statement of current account of Ashley Abrahams at Wonder Bank. </li></ul><ul><ul><li>Identify items income and expenditure </li></ul></ul><ul><ul><li>Complete the balance column </li></ul></ul><ul><ul><li>Calculate the bank fees from 4 th July to 25 th July. </li></ul></ul>
  19. 20. Activity 3 <ul><li>Table of possible bank costs/charges </li></ul><ul><ul><li>Which bank offers the best interest rate p.a </li></ul></ul><ul><ul><li>At which bank is it easiest to open an account </li></ul></ul><ul><ul><li>If you want to withdraw R400 cash at the ATM of a bank, which holds your account, how much would it cost you at each bank? </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>e. Which bank would you advise your friend to go to? Explain your answer. </li></ul></ul>Bank A A: R6.40; B: R3,60 C: R32 R11.90; B: R9.10; C: R39; R6,40; R4,70
  20. 22. Activity 3 <ul><li>4. Your facilitator will give you a bank application form. Complete the form with a friend </li></ul>
  21. 23. Assignment 1 <ul><li>From four local banking options, compare the costs of the following transactions: </li></ul><ul><ul><li>Internet transfer of R35 000. </li></ul></ul><ul><ul><li>Withdrawal over the counter of R50 000 to pay wages of employees. </li></ul></ul><ul><ul><li>Debit-order on a monthly payment of R6 500. </li></ul></ul><ul><ul><li>ATM cash withdrawal of R1 000 at a SASWITCH terminal. </li></ul></ul><ul><ul><li>Monthly administration fee on current account. </li></ul></ul><ul><ul><li>Cheque made out for R12 000. </li></ul></ul>
  22. 24. 4. Investment methods – financial instruments
  23. 26. Activity 4 <ul><li>Give the meanings of the following words or phrases: </li></ul>
  24. 27. Activity 4 <ul><li>2. Give the advantages and disadvantages of each of the following investment methods: </li></ul>
  25. 28. 5. Records <ul><li>Source documents </li></ul><ul><ul><li>Sales documents </li></ul></ul><ul><ul><li>Purchase documents </li></ul></ul><ul><ul><li>Banking documents </li></ul></ul><ul><li>Sales documents </li></ul><ul><ul><li>Invoices </li></ul></ul><ul><ul><li>Debit notes </li></ul></ul><ul><ul><li>Credit notes </li></ul></ul><ul><ul><li>Receipts </li></ul></ul><ul><ul><li>Till rolls </li></ul></ul><ul><li>Purchase documents </li></ul><ul><ul><li>Petty cash slips / vouchers </li></ul></ul><ul><ul><li>Purchase orders </li></ul></ul><ul><ul><li>Dispatch notes and invoices </li></ul></ul><ul><ul><li>Credit and debit notes </li></ul></ul><ul><li>Banking documents </li></ul><ul><ul><li>Bank statements </li></ul></ul><ul><ul><li>Cheque payments </li></ul></ul>
  26. 29. Tips to help your reduce your banking fees <ul><li>Use your own bank’s ATM and not a Saswitch ATM. </li></ul><ul><li>Withdrawing money inside the bank is more expensive than at the ATM outside the bank. </li></ul><ul><li>Withdrawing money at one or two of the big supermarkets is cheaper than at an ATM. </li></ul><ul><li>Paying with your debit card is cheaper than withdrawing money and paying cash. </li></ul><ul><li>It is cheaper to withdraw one lump sum than to withdraw small amounts at short intervals. </li></ul><ul><li>Use ATM slips instead of asking for mini bank statements. </li></ul><ul><li>It is cheaper to have money paid into your account electronically than to be paid by cheque which you then deposit inside your bank. </li></ul><ul><li>Avoid the cost of denied-transaction ATM fees by knowing how much you have in the bank. </li></ul>
  27. 30. Case Study: Beverly’s payslip and bank deposit slip
  28. 31. Questions <ul><li>What is Beverley’s birth date? </li></ul><ul><li>Does she receive a 13 th cheque? </li></ul><ul><li>What % tax does she pay? </li></ul><ul><ul><li>What % UIF does she pay? </li></ul></ul><ul><ul><li>Is UIF calculated on the basic salary or the net pay? </li></ul></ul><ul><li>Explain what UIF means. </li></ul><ul><li>Get a bank deposit slip from your bank and fill it in for Beverley depositing her salary into her savings account with account number 822 82826665 which is held at the Hatfield branch in Tshwane. Add this deposit slip to your file of evidence. </li></ul>9 June 1994 Yes 18.00% 1% Basic salary Unemployment Insurance Fund
  29. 32. Activity 5 <ul><li>Beverley has to have the tyres of her car changed. She is advised to put the front tyres on the back and to put two new tyres in front on her small car with registration number CY 23482. </li></ul><ul><li>The tyres cost R650 each. The labour takes three quarters of an hour and the labour cost is R89 per hour. Complete the invoice. Calculate the VAT at 14% </li></ul>
  30. 33. Beverly Adams CY 23482 Replace tyres (3/4 x R89) Tyres 2 x R650 R1300 66 75 R1366 75 R191 35 R1558 10
  31. 34. Activity 5 <ul><li>2. Beverly pays cash. Complete the receipt for her. </li></ul>Beverly Adams One thousand three hundred and sixty six ten 1558 10 Beverly Adams
  32. 35. Activity 5 <ul><li>Beverley receives the following statement of account for services rendered from her dentist. </li></ul><ul><ul><li>What does the VAT inclusive mean? </li></ul></ul><ul><ul><li>If she does not pay at the end of the month, where will the R390 then be printed? </li></ul></ul><ul><ul><li>After 90 days, if she still has not paid, what will the dentist then probably do to get his payment </li></ul></ul>
  33. 37. Activity 5 <ul><li>This is what a cheque stub looks like. </li></ul><ul><ul><li>Explain the meaning of the words in the small table on the cheque stub. </li></ul></ul><ul><ul><li>Create your own example to fill in the cheque and the cheque stub. </li></ul></ul>
  34. 38. 6. Savings <ul><li>Tips on staying out of debt: </li></ul><ul><ul><li>Work out exactly how much this debt is costing you. </li></ul></ul><ul><ul><li>If you have more than one debt such as hire-purchase agreements which you are paying off by month, it might be better for you to get a loan from your bank to pay off all of these debts and then repay only the one bank loan. It is called consolidating your debt. </li></ul></ul><ul><ul><li>Don’t ever be tempted to buy on credit. </li></ul></ul><ul><ul><li>Be careful when taking out insurance of some sort, first talk to a trustworthy person who has the necessary knowledge. </li></ul></ul><ul><ul><li>Take debt seriously. Pay it off as quickly as at all possible. </li></ul></ul><ul><ul><li>Don’t start saving before paying off all of your debts. </li></ul></ul>
  35. 39. 6. Savings <ul><li>Tips on saving </li></ul><ul><ul><li>You have to start saving at a young age if at all possible. </li></ul></ul><ul><ul><li>Save R10 out of every R100 that you earn, i.e. 10%. </li></ul></ul><ul><ul><li>Compare the interest rates on the savings accounts of different banks and use the bank with the best/highest interest rate. </li></ul></ul><ul><ul><li>Never use a micro loan business. They make their living from charging extremely high interest rates on the money loaned to you. </li></ul></ul><ul><ul><li>Do not borrow money if not absolutely necessary. The high interest charged will destroy you financially. </li></ul></ul><ul><ul><li>Do not ever be tempted to get a credit card. The extremely high interest rates on this kind of debt will destroy you. </li></ul></ul><ul><ul><li>Do not ever buy on hire-purchase. Save the cash and buy cash. </li></ul></ul><ul><ul><li>Earthly possessions are rarely worth going into debt for. </li></ul></ul>
  36. 40. 6.1 Simple and compound interest <ul><li>Simple interest = P x T x R / 100 </li></ul><ul><li>Compound interest A = P(1+R/100) n </li></ul>
  37. 41. Activity 6 <ul><li>Calculate the interest amount on R55 500 in a fixed deposit at 8% p.a. for five years. Calculate the interest on a monthly basis. </li></ul>R27 686.43
  38. 42. Activity 6 <ul><li>Calculate the interest rate if R7 000 increases to R15 000 in 5 years. Interest is calculated on an annual basis. </li></ul>
  39. 43. Activity 6 <ul><li>Calculate the value after 4 years of a car that cost R65 000. Devaluation is 6% p.a. </li></ul>R50 748.68
  40. 44. Activity 6 <ul><li>Calculate the amount that has to be invested to have R45 000 available after 5 years at an interest rate of 10% p.a. calculated on a monthly basis. </li></ul>P = A(1+r) -n P=45000(1.01) -5 P=27 941.46
  41. 45. Activity 6 <ul><li>5. In May of 2005 the debt level of South Africans was 57%. This means that 57 cents out of every rand that South Africans earned went into payment of debt. In October of 2005 this level had risen to 62%. In October 2007 it was 76,5% which means that R76,50 out of every R100 earned, goes directly into payment of debt. In March 2008 the Reserve Bank reported that the amount that people were paying to service their debt had risen to an all-time high of 80% of disposable income. </li></ul><ul><ul><ul><li>Draw a broken line graph of this information with debt level percentage on the vertical axis. Remember to scale the horizontal time axis correctly, i.e. the same time period earns the same gap on axis. </li></ul></ul></ul><ul><ul><ul><li>Make a prediction for the average debt level in the middle of 2009. </li></ul></ul></ul><ul><ul><ul><li>If a person with the average debt level for 2008 gets a salary of R8 800 per month, how much of this does he spend in debt payment? </li></ul></ul></ul>
  42. 47. Activity 6 <ul><li>The ratio of saving to spendable income is only 0,2% in South Africa, and the gap between savings and debt is increasing. </li></ul><ul><ul><li>Calculate how much a person saves if his salary is R8 800 per month. </li></ul></ul><ul><ul><li>How much should he save per month? </li></ul></ul>R17,60 R1320
  43. 48. Case Study <ul><li>Repayment on a home loan </li></ul><ul><li>Look at the effect of increasing a debt payment on the final payment amount. </li></ul><ul><li>The figures are for a house loan of R500 000 at the November 2005 prime rate and for a 20 year payment option. (Source: Die Burger of 19 th November 2005). </li></ul><ul><ul><li>Fill in the column with % saving compared to the loan amount. </li></ul></ul><ul><ul><li>Fill in the column with the reduced time necessary to repay the original loan amount. </li></ul></ul>
  44. 49. 9.46% 18.43% 25.82% 32.56% 38.60% 18 y 10 m 17 y 5 m 17y 10m 16y 15y3m
  45. 50. Case Study: The extraordinary power of compound interest <ul><li>One of the big banks in South Africa have the following two examples on compound interest. </li></ul><ul><ul><li>Monthly payment option: </li></ul></ul><ul><ul><ul><li>Investor A starts with a payment of R250 per month, and this is automatically increased by 10 % each year over a total investment term of 15 years. </li></ul></ul></ul><ul><ul><ul><li>Investor B starts with a payment of R350 per month, and this is automatically increased by 10% each year over a total investment term of 15 years. </li></ul></ul></ul><ul><ul><li>Draw up two tables and calculate the balance in the bank accounts of the two investors at the end of each year (monthly calculation of interest). </li></ul></ul><ul><ul><li>Draw two graphs to illustrate the increase in the investment. </li></ul></ul><ul><ul><li>Calculate the ratio between the final amounts of the two investors as well as the ratio between the total payments by the two investors. </li></ul></ul><ul><ul><li>Comment on your results. </li></ul></ul>
  46. 51. Case Study: The extraordinary power of compound interest <ul><li>2. Single-payment option: </li></ul><ul><ul><li>Investor A chooses an investment term of 15 years and a single payment of R10 000 </li></ul></ul><ul><ul><li>Investor B chooses an investment term of 15 years and a single payment of R15 000. </li></ul></ul><ul><ul><li>Draw up two tables for the balance and calculate the balance in the bank accounts of the two investors at the end of each year (monthly calculation of interest). </li></ul></ul><ul><ul><li>Draw two graphs to illustrate the increase in the investments. </li></ul></ul><ul><ul><li>Calculate the ratio between the final amounts of the two investors as well as the ratio between the starting amounts of the two investors. </li></ul></ul><ul><ul><li>Comment on the results. </li></ul></ul>
  47. 54. Case Study: Inflation <ul><li>What are grain products and why are they called “staple” foods. </li></ul><ul><li>What is the Reserve Bank’s inflationary target? </li></ul><ul><li>Is inflation on the increase or decrease? Draw a small bar chart to illustrate your conclusion. </li></ul><ul><li>What does CPIX stand for? Explain the concept. In April of 2008 the CPIX was 10,4%. </li></ul><ul><ul><li>How much higher is this than the Reserve Bank’s top target limit? </li></ul></ul><ul><ul><li>What is the percentage increase since January of 2008? </li></ul></ul>
  48. 55. Case Study: Inflation <ul><li>Four food items are mentioned in the first excerpt. What is the average increase of these four food items? Explain why this is not the average food increase but the top of the range. </li></ul><ul><li>If a bottle of cooking oil costs R19,98 in February 2008, what did it cost 12 months ago in February 2007? And what was the price of this bottle of oil in March 2006? </li></ul><ul><li>In the second week of June 2008 oil traded at $132 per barrel. Calculate the % increase between 27 th March and the second week in June of 2008. If the price of oil increases to $200 a barrel then the price of petrol will be R16 per litre. Calculate the percentage increase in barrel price of oil between March and June of 2008. </li></ul>
  49. 56. Case Study: Inflation <ul><li>If Beverley has to commute 10 km per day to and 10km back from work and the petrol consumption of her car is 10km per litre, calculate what her monthly cost will be at R10 per litre and also at R16 per liter. Calculate the percentage increase in monthly expense towards petrol for Beverley. </li></ul><ul><li>Will Beverley still be able to work at the same place or will she have to listen to Mr. Thabo Bolani the chairman of the National Consumer Forum in Pretoria who said that consumers had to get alternative methods of transport? </li></ul><ul><li>Calculate the average percentage rise for the items in the table. Why is it so much higher than the announced inflation rate of 10,4%? </li></ul>
  50. 57. Financial statements <ul><li>Income statement </li></ul><ul><li>Balance sheet </li></ul>
  51. 58. Activity 7 <ul><li>For the Income Statement of Sam’s parents, a budget can be worked out for a projected income of R7550 per month </li></ul><ul><ul><li>Calculate total budgeted expenditure </li></ul></ul><ul><ul><li>Calculate the total expenditure for the month of April for en tertainment. </li></ul></ul><ul><ul><li>Calculate the percentage that each expense item constitutes with respect to the total expenditure. </li></ul></ul><ul><ul><li>Calculate the variance amounts between the budgeted amounts and the expenses for April. State whether the variance is positive or negative. </li></ul></ul><ul><ul><li>Calculate the percentage variance for each expense item (state positive or negative.) </li></ul></ul>
  52. 59. R7556 R7865 27.13% 5.29% 35.07% 6.35% 3.97% 3.5% 3.3% 5.26% 37.71% 3.31% 3.97% 0 0 R35 R20 R50 R0 -R150 R54 R650 R50 0% 0% 113.2% 104.16% 116.6% 0% 60% 136.99% 122.81% 125%
  53. 60. How to look at an income statement <ul><li>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? </li></ul><ul><li>Next, assess whether it is an acceptable profit. Alternatively, if a loss was made was this expected? </li></ul><ul><li>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. </li></ul><ul><li>Proceed to examine the individual income and expense items. </li></ul>
  54. 61. Financial results can be judged against <ul><li>Industry standards, </li></ul><ul><li>The previous year’s financial information, </li></ul><ul><li>Goals (budgets) set at the beginning of the financial period. </li></ul>
  55. 62. 8. Budgets <ul><li>A budget can apply to a single event such as a hot-dog stand at a Saturday morning market. </li></ul><ul><li>An individual has to decide how he must spend his income so as to avoid running into debt – he sets up a budget. </li></ul><ul><li>A household has to budget its monthly expenses against its income. </li></ul><ul><li>The company you work for will also have an annual budget. </li></ul><ul><li>The municipality that you live in has a budget. </li></ul><ul><li>Similarly, a country has to produce more than it uses - and thus the government has to gain more in revenue than it spends. </li></ul>
  56. 63. Case Study: Beverly’s personal budget <ul><li>Beverley is worried that she will not be able to manage all her expenses on her monthly net income of R4279, 61 </li></ul><ul><li>Beverley has been given the advice to write all of her expenses in a small book. She did so for May, June and July and has calculated the average spending per month for the different categories. </li></ul><ul><li>You have to help her organise a budget that she can stick to. </li></ul><ul><li>Beverley’s average expenses for three months running: </li></ul>
  57. 65. Case Study: Beverly’s personal budget <ul><li>Draw up a table with the above items organised into “fixed expenses” and variable expenses” and “irregular expenses”. Irregular expenses are those that are made once per year such as TV license. For these irregular expenses calculate how much Beverley must pay per month or put away per month so that she does not have to take the full amount out of one month’s pay. </li></ul>
  58. 66. Rent 920 Car payment 538 Household income 105 Telephone rental 25 R1588 Electricity Water Landline calls Pizza Food and household goods Concert and movies Chemist Air time Take aways Petrol Parking TV License (225 /12) Tyres Doctor and dentist Clothes 169.50 89.25 68.92 70 939.88 40 154.36 110 68.35 480 115 2305.26 18.75 108.33 138.50 344.56
  59. 67. Case Study: Beverly’s personal budget <ul><li>How much does Beverley have left for clothes (x) and savings (y)? </li></ul><ul><li>Where can she cut down on expenses to be able to buy some clothes and to start saving? </li></ul><ul><li>Make a plan for her so that she can have R100 per month to put away as savings and R250 every three months for clothes. </li></ul><ul><li>The inflation rate is 10,5%. Calculate for her a reasonable request for an increase in salary at the end of February of the next year. </li></ul><ul><li>The price of petrol suddenly increases from R5,85 to R10,00 within six months’ time. Calculate the percentage increase in petrol and her adapted monthly petrol expense. </li></ul>
  60. 68. Activity 8 <ul><li>Complete the table by filling in the columns on variance amount, % variance and % expenditure for the National budget. </li></ul>
  61. 70. Activity 9 <ul><li>You want to set up a table at a regular Saturday market </li></ul><ul><ul><li>Decide what you want to sell </li></ul></ul><ul><ul><li>Draw up a budget for this small project </li></ul></ul><ul><ul><li>Include expenses and income as well as net profit or loss </li></ul></ul>
  62. 71. Case Study: Interpret the news 3 <ul><li>From The Sunday Times of 17 th February 2008 comes this small report. An old lady in KwaZulu Natal shares her house – and her pension of R870 – with a daughter and five great-grandchildren. Everyone else has died. The only income for the small household is the pension of Anna Zikhali who will turn 95 later this year. </li></ul><ul><li>Anna Zikhali knows exactly what her pension can buy: 50kg of mealie meal at R238; 5kg of sugar beans at R49; 5 litres of cooking oil at R42; and a bag of potatoes at R32. School fees are R60 per year, a pair of Toughie school shoes costs R120 for each child, and there are shorts, dresses, shirts, jerseys and a few other clothing items. After that there is not much left. </li></ul>
  63. 72. Case Study: Interpret the news 3 <ul><li>a. Divide her expenses into fixed (which here includes irregular expenses) and variable expenses. </li></ul>Fixed: School shoes; Variable: mielie meal; sugar beans; cooking oil; potatoes; school clothes
  64. 73. Case Study: Interpret the news 3 <ul><li>b. Which other expenses not listed here, must she have? For example, consider the following in your answer: she lives far from the pension pay-out point and from the clinic and the school; she has to cook the food; they have no electricity but they want to see at night so that home-work can be done by the children; illness. </li></ul>electricity/gas; replacement of damaged utensils, cutlery, candles; possible occasional taxi
  65. 74. Case Study: Interpret the news 3 <ul><li>Draw a pie chart of only her food expenses. </li></ul>
  66. 75. Case Study: Interpret the news 3 <ul><li>What plan can you make for the children when Anna dies? Look at question e. </li></ul>Child welfare; foster-care grants
  67. 76. Case Study: Interpret the news 3 <ul><li>e. The 2008 budget gives R62 million to more than 12 million people in welfare grants. </li></ul><ul><ul><li>2,2 million pensioners on a monthly R870 pension. </li></ul></ul><ul><ul><li>1,4 million people on a monthly R870 disability pension. </li></ul></ul><ul><ul><li>Nearly half a million children on the R620 foster-care grant. </li></ul></ul><ul><ul><li>Close to eight million on the R200 child-support grant. </li></ul></ul><ul><li>There are two ways to draw a pie chart for this information. Do both. </li></ul>
  68. 79. Summative assessment <ul><li>Ask around either in the class, amongst fellow-learners or at a business, to find someone who has knowledge of these contracts. </li></ul><ul><li>Find out: </li></ul><ul><ul><li>What kind of information is necessary to be accepted as a contracted person? </li></ul></ul><ul><ul><li>Is it possible for a furnishing store to re-possess/take back furniture that you buy under a hire-purchase agreement? Explain. </li></ul></ul><ul><ul><li>If the store does re-possess the bought item, what happens to the installments that you have already paid? </li></ul></ul><ul><ul><li>Which is better for a contracted person: to pay smaller or larger amounts per month? </li></ul></ul><ul><ul><li>What maximum % is a loan-business allowed to charge you? </li></ul></ul><ul><ul><li>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? </li></ul></ul><ul><ul><li>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” </li></ul></ul>
  69. 80. Activity 10 <ul><li>The opening page of this account application folder reads: NO FUSS - NO FORMS </li></ul><ul><li>The four back pages of this application enticement are in fine print. And in between these two pages is a five page account application form which you have to fill in. </li></ul><ul><li>Here is just a section of the form. Fill it in. </li></ul>
  70. 83. Activity 11 <ul><li>1. Look at the table for cell phone rates: </li></ul>
  71. 84. Activity 11 <ul><li>Explain the words “peak” ,”off-peak” and “happy hour”. </li></ul><ul><li>Is it cheaper to quickly phone (45 seconds) or to send an SMS? </li></ul><ul><li>c. 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 have use happy hour rates for 22 calls to family and friends talking on average 10 minutes. You send about 100 SMS’s during the month. Calculate how much your cell phone cost was during month. </li></ul>Peak is during the main calling hours; Off peak outside of the main calling time; happy hours will be an hour where the rates are discounted Assuming per second billing: Off peak: phone 73c SMS 35c; Peak phone R1.35 SMS 0.80
  72. 86. Activity 11 <ul><li>The Hugenot Tunnel toll gate has the following transport rates: </li></ul>
  73. 87. Activity 11 <ul><li>A transport company uses the tunnel regularly for delivery of goods between Cape Town and Bloemfontein. Each months this company has the following tunnel trips: 23 light vehicles, 19 trucks with two axles, 9 trucks with 3-4 axles and 2 trucks with 5-9 axles. </li></ul><ul><ul><li>Calculate the monthly tunnel expense of this company </li></ul></ul><ul><ul><li>Yet another toll gate is proposed between the tunnel and Cape Town with a 15% less charge than the tunnel charges. Calculate the monthly expense of the company if the second toll gate is put into operation. Show your calculations and substantiate your answers. </li></ul></ul>
  74. 88. Activity 11 <ul><li>A municipality charges for water on a sliding scale: </li></ul>
  75. 89. Activity 11 <ul><li>A household uses 5568 litres of water during a certain month. What do they have to pay? </li></ul><ul><li>During a very dry month, this same family uses 13 kilolitres of water. Calculate this cost. </li></ul><ul><li>The Sunshine Plants Nursery uses on average 4545 kilolitres per month. Calculate the cost. </li></ul>
  76. 90. Summative Assessment <ul><li>The Business Report of 27 th March 2008 writes about the debt trap that is tightening around the poor: </li></ul><ul><li>The amount that people are paying to service their debt has risen to an all-time high of 80 percent of disposable income, according to figures released earlier this year by the South African Reserve Bank. </li></ul><ul><li>According to Allister Long, managing director of risk company Powerhouse, as wealthier people are certainly paying less of their disposable income to service their credit cards and other debts, this means that for many others the percentage is over 100 percent. </li></ul><ul><li>There are some positive signs, however: the cash payment record of some credit retailers has increased from 25/75 (cash/credit) two years ago to 50/50 today. </li></ul><ul><li>This is a positive sign as it means people are starting to save until they have enough money to pay for an item. </li></ul><ul><li>The two major reasons for the current squeeze are the increases in interest rates, combined with the implementation of the National Credit Act (NCA). </li></ul><ul><li>“ There is nothing wrong with the Act itself, but because of the potential consequences of being found a ‘reckless lender’ companies have been over-cautious in their process of implementation, while trying to understand the risks of over-lending. </li></ul><ul><li>“ We’re only 12 months into the implementation, and it may take another 6 – 12 months before everything settles down,” says Long. </li></ul><ul><li>The penalties for being found a ‘reckless lender’ are heavy: in addition to a fine, the lender may be required to write off the loan with no right of legal recourse against the customer. </li></ul><ul><li>“ Much is being done to educate consumers by the signatories to the Financial Sector Charter, but it is a case that there can never be too much. Finmark recently released data that 37 percent of South Africans do not even understand the term “interest rate” – so education needs to commence at an elementary level,” says Long. </li></ul>
  77. 91. Summative Assessment <ul><li>Explain the meaning of the information in the first paragraph. </li></ul><ul><li>What does “the percentage is over 100 percent” mean? </li></ul><ul><li>What does this mean: “the cash payment record has increased from 25/75 to 50/50”? </li></ul><ul><li>Why would the increase in interest rates affect the debt level of a person? </li></ul><ul><li>Why is it not so easy any longer to obtain credit from a lender? </li></ul><ul><li>Explain with an example the meaning of “interest rate”. </li></ul><ul><li>Explain the difference between a credit card and a debit card. </li></ul><ul><li>Which of these two cards has an interest rate that is higher and also negative to the holder of the card? </li></ul>
  78. 92. Summative Assessment <ul><li>Leonard Dube’s Courier Services.. </li></ul><ul><li>The Sunday Times of 3 rd September 2006 reported on the owner of a small company. </li></ul><ul><li>Leonard Dube worked for 11 years as a driver for an auditing firm in Johannesburg. In 2003 he started a small courier service with one employee (himself), two cars, and a few clients. In 2006 he had five employees and one part-time worker. He owned 6 vehicles, and turnover had grown from R20 000 a month in the first year to about R100 000 a month in 2006. </li></ul><ul><li>Leonard bought only new vehicles for the company, and had them serviced every three months at a cost of R3000 a car. His vehicles were financed on a hire-purchase basis and his finance payments came to a total of R17000 a month. He spent R4000 a week on petrol. Comprehensive insurance for his vehicles cost R4000 a month. Communication is vital and he bought cellphones for all of his staff members and paid for the airtime, which cost him R5000 a month in 2006. </li></ul>
  79. 93. Summative Assessment <ul><li>What does “monthly turnover” mean – is it gross income or net income? </li></ul><ul><li>What is the annual turnover of the business? </li></ul><ul><li>Which of Leonard’s listed expenses are fixed and which are variable? </li></ul><ul><li>List his monthly expenses in 2006 and next to it the annual expenses for each category of expense. </li></ul><ul><li>If petrol cost R6,50 per litre in 2006, but it costs R10 per litre in 2008, what will be the increase in Leonard’s monthly petrol cost? </li></ul><ul><li>Which other expenses might he have in his business? </li></ul>
  80. 94. Summative Assessment <ul><li>Beverley wants to make a plan to earn some extra money. She can use her stove for cooking or baking but searches for an energy efficient recipe. She decides to make fudge which takes very little cooking time. She will deliver to local shops. The shop-keeper will take a percentage of the sale cost. She has a foolproof recipe from her granny’s recipe book. The recipe will make about 20 pieces of fudge. She decides to double the recipe. </li></ul>
  81. 95. Summative Assessment <ul><li>Calculate and complete the two open columns. </li></ul><ul><li>Beverley sells the fudge in single pieces delivered in a big glass jar to the shops. The individual pieces sell for R2,50 per piece. How much does she make from double the recipe? </li></ul><ul><li>How much does double the recipe cost her? </li></ul><ul><li>Is it worth her while to continue with the project? </li></ul><ul><li>She wants to make R500 in the first month and then take it from there. How much fudge will she have to make? </li></ul>
  82. 96. Summative Assessment <ul><li>Beverley needs you to help her save on phone costs. Use the cell phone table in section 10. 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. </li></ul><ul><li>  </li></ul>
  83. 97. Summative Assessment <ul><li>Beverley needs you to help her save on phone costs. Use the cell phone table in section 10. 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. </li></ul>
  84. 98. Summative Assessment <ul><li>5. You have a small laundry and are investigating the prices of washing powders. You gather the following information from different advertisements and summarise the information in one table. These are the prices for three different packaging's of three different types of washing powder: </li></ul>
  85. 99. Summative Assessment <ul><li>What would each kilogram of these washing powders cost when bought in the 2kg package? </li></ul><ul><li>What would each kilogram of these washing powders cost when bought in the 5kg package? </li></ul><ul><li>Which washing powder is the cheapest per kilogram? </li></ul>
  86. 100. Summative Assessment <ul><li>This table is from Die Burger of 11 April 2008 </li></ul>
  87. 101. Summative Assessment <ul><li>Complete the first three columns using the pattern of the numbers </li></ul><ul><li>Complete the last two columns after studying where the first two completed values of each column have come from </li></ul><ul><li>If you have a mortgage of R1.5 million what will be the amount that you pay on this mortgage within one year? </li></ul><ul><li>What do you this is a realistic buy for a family earning R20 000 per month </li></ul><ul><li>If a house cost R300 000 in 1995 and costs R1.8 million now, what is the increase amount and the percentage increase during this period </li></ul><ul><li>Use 6% as the average inflation rate during the period of increase from June 2006 to June 2008 and calculate what you think the house should realistically cost in 2008. </li></ul>