Grade 12 · CAPS-aligned
Grade 12 Financial Maths — Loans, Investments & Sinking Funds
Paper 1 finance formulas you actually need, plus a trick for spotting which one to use.
Financial maths is tested in Paper 1. CAPS weights the finance area at 15 ± 3 marks, so the goal is to choose the right formula and keep calculator precision until the final answer.
Why most learners find this hard
Choosing between the annuity, loan, and lump-sum formulas under exam pressure. The numbers are easy; the decision-making is the skill.
What you'll learn
- Compound interest: A = P(1 + i)ⁿ
- Future-value annuity: F = x[((1 + i)ⁿ − 1) / i]
- Present-value annuity: P = x[(1 − (1 + i)⁻ⁿ) / i]
- Deciding which formula matches a loan, savings, or sinking fund scenario
- Effective vs nominal interest rates
Worked example
R5 000 is invested at 8% per year compound interest for 6 years. Find the future value.
- 1Use: A = P(1 + i)ⁿ
- 2Substitute: A = 5000(1 + 0.08)⁶
- 3Keep the calculator value for (1.08)⁶ until the final answer.
- 4Rounded at the end: A = R7 934.37. If you multiply by the displayed 1.5869, you would get R7 934.50 because that intermediate value is rounded.
Answer: ≈ R7 934.37
Exam tips
- Convert the interest rate to match the compounding period: divide an annual nominal rate by 12 only when it is compounded monthly; for an effective annual rate, use (1 + i)^(1/12) − 1 for the monthly rate.
- Always write the formula before substituting — markers award a mark for it.
- Use the memory function on your calculator for the intermediate value of (1 + i)ⁿ.
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