Slides for a business studies lesson

1. INTEREST AND BORROWING
CHARGES!
Personal Finance and Financial
Services.

2. Learning Objectives
Explain the difference between interest and
borrowing rates.
Demonstrate an understanding of interest rates
through calculation.
Explain and analyse the effect of Economic Factors
on business decisions.
Define words and phrases related to Personal
Finance.

3. Quick Task
Write down everything you know about Interest
Rates! 60 seconds! Go! Go! Go!
What are Interest Rates?
The reward offered to savers, and the cost of
borrowing money.
Bank of England sets this.

4. Who is affected my Interest Rates?
Everyone
E.g. bankers, savers and borrowers
As a group, discuss how you think Interest Rates
affect each of these groups.
When Interest Rates are high, borrowing is more
expensive and you get a higher return on your
savings.

5. Example
Imagine you want to borrow £5000 for a car over 2
years. The banks rate of interest is 10% p/year.
Work out how much interest you pay each year and
the total of interest after the 2 years.
Year 1 : £5000 at 10% = £500
Year 2: £5500 at 10% = £550
Total borrowing charge for 2 years is £1050

6. Exchange Rates
What are exchange rates?
Rate at which one currency can be converted into
another.
Single European Currency Countries (€)…
Spain, Rep. of Ireland, France, Germany...

7. Holidays!
Other ways of carrying your money when on
holidays!
-Cash
-Credit Card
-Travellers Cheques
Scenario…Imagine you’re going to a developing
country for charity work, there is a high crime
level, especially to vulnerable tourists.
How would you carry your money here?
(see worksheet)

8. WRITE AS LIST OF THINGS YOU
THINK WILL HAPPEN TODAY.
WRITE WHETHER OR NOT YOU
HAVE CONTROL OVER THEM.
Task:

9. Economic Factors
When a business has no control over something this
is known as an economic factor.
Examples:
Interest Rates
Exchange Rates
Inflation (?) –(The general upward price movement of
goods and services).
Government…

10. Task
Read the text in front of you, try and highlight any
economic factors you can see.
Explain why more people want to holiday in the
UK.
- Cheaper – cost of travelling abroad has gone up.
- Credit Crunch – people have less money to spend.

11. Possible effects of Inflation to Hoburne?
Negative effects-people will have less money to
spend on holidays.
Number of people holidaying in Hoburne Holiday
Park will fall.
Hoburne will lose money.

12. VAT – reverts to 17.5% resulting in Hoburne’s prices
falling. What will happen now? Discuss…

13. End of Lesson 