 Welcome to the first lesson of NSSEO Mathematics in a series of two lessons. The topic of this lesson is money and finance. The objectives of this lesson are to solve exchange rate problems, solve simple earning calculations, solve simple interest problems, solve compound interest problems. Let's switch over to hear what Sam and Jason are discussing about this topic. What? You must be joking. Nope, I'm not joking. But that's way too expensive. Come on man, that's way too expensive for my pocket. And I really wanted to buy that CD. My dad would never give me so much money. Yeah, tell me about it. You know what I wanted to buy? I wanted to buy some CDs, DVDs, as well as the new FIFA 2009 games. Yeah, I also wanted that one. But do you know how much it costs? Yeah, and wait till you hear this. It was $509. Sure. Yeah. Otherwise, we must wait a few months until the games are in special. But you know what? I heard my brother's friends telling him that CDs, games and DVDs are much cheaper overseas. Whoa. But how much cheaper? I don't know. Maybe we can check on the internet. But do you know where to go and look? I guess Amazon.com. I think we can check there. Can we use your laptop? Yeah, sure. Let's go to the study. Okay, we're online now. But shouldn't we know what the exchange rate is in order to change from one currency to another? We should, but don't worry. We did that in mass today. How to change from one currency to another. Okay, so you can show me how to convert from one currency to another? Sure. You see that the Chris Brown CD is about 10 US dollars. At the moment, the exchange rate is 1 US dollar is equal to 7.73 cents. That's Namibian dollars. So in order to find the equivalent value of the CD in Namibian dollars, we need to multiply the 7.73 by 10. That means that the CD in Namibian dollars is actually about $77.30. Okay, that's not so difficult to do. So does that mean that is what we would pay for the CD if we ordered it through the internet? No, because you see, we'll still have to pay mail costs as well as checks. Oh, we'll have to find out then. Because if it's not too much, we can actually save a lot of money. Sure. But that still doesn't solve our problem. Where are we going to get the money from? The only way we're going to get the money, Sam, is if we get ourselves casual jobs. Casual jobs? How much do they pay? Where's the newspaper? Let's see if there are any jobs in here. Here's a job in a clothing store. They pay $8.50 and overtime is $10.50. That sounds like good money to me. Yeah, so if you work eight hours, normal time over the weekend, and five hours overtime, you can make paraballo. Let's work it out. How much can you earn in such a weekend? For normal hours, that would be eight multiplied by $8.50, which is $68.00. Over time would be five multiplied by $10.50, which is $52.50. So that means you can earn $120.50 during a weekend. So if we could work and save some of that money, we should have enough to buy what we need. But Sam, how does the savings business work? Well, Jason, let me show you. When you save money or borrow money from an institution, you either get interest or you pay interest. Yeah, Sam, I know that. But how do you calculate what your interest will be? Let's take an example. If we take $17.00 per month and save it in the post office, we will get about 7.6% interest, simple interest, that is. Simple interest? What's that? And do you get other types of interest as well? Sure, you get simple interest as well as compound interest. The interest you pay or receive depends on the sum of money that you've invested or borrowed. It also depends on the time and the rate of interest. That sounds interesting. What more can you tell me? Let's see. We use different symbols when we calculate interest rates. Now, I equals interest, P equals amount of money invested, T equals time, and R equals interest rate. I see. To calculate simple interest, it is P multiplied by T, multiplied by R, and divided by 100. Let's see. Let's say we save $17.00 million for a year and receive interest of 7.6. How much interest will you receive for the year? Easy. To calculate simple interest, it is P multiplied by T, multiplied by R, and divided by 100. Let's see. Then it is $17.00 million, multiplied by 1, multiplied by 7.6, and divided by 100. That gives you $5.00 million and 32 cents. Okay. But what if I only want to save the money for nine months and not for the whole year? Well, then you do the same calculation. But for the time you use the number of months divided by 12, that is 9 divided by 12. Try to do the same calculations we had, but instead use time of nine months. Let's see. The amount being saved is $17.00 million. And this is for nine months. And the interest is 7.6%. What will the interest be? So to calculate the simple interest, it will be P multiplied by T, multiplied by R, and divided by 100. That is $17.00 million, multiplied by 9 over 12, multiplied by 7.6, divided by 100 again. That gives you $3.99 of interest for nine months. Okay. But what does compound interest mean? Well, compound interest is when the interest for one year is added to the investment and the interest of the next year is calculated on the increased investment. Okay. So we receive more interest if we invest our money at compound interest? Yeah. Let's take $17.00 million and invest it for two years at the post office at an interest rate of 7.6% compound annually. To calculate the interest in the first year, we will use the formula P multiplied by T, multiplied by R, and divided by 100. Then it is $17.00 million, multiplied by 1, multiplied by 7.6, and divided by 100. That gives you an interest of $5.32 for the first year. That means at the beginning of the second year, you will have $75.32. Then you do the same calculations as in the first year to get the interest for the second year. Can you do the calculations on the interest for the second year? Okay. The interest for the second year will be P multiplied by T, multiplied by R, and divided by 100. That is $75.32, multiplied by 1, multiplied by 7.6, divided by 100. That's $5.72 interest for the second year. At the end of the second year, we will have $81.04. That's right. Now you've got it. But that still doesn't help us much, Sam. Then we must still save at least $17.00 million and wait for more than two years. Yeah. We'll definitely have to make a plan though. Maybe we'll have to take a loan from our parents. I also think so. At least then we won't have to pay any interest. Yeah. But then we'll have to wait for the music shop to have a sale because they usually have a 45% discount on certain items. Wow. That's a lot of discount. Then we'll really have to make a plan to get the money together. I think we should apply for those jobs so long because we'll save a chunk of money at the post office. And when the music shop has its sale and we don't have enough money, we can still borrow it from our parents. That sounds like a brilliant plan, Sam. I just hope that our parents will be as positive as you are, Jason. Anyways, let's check some more videos. I'll recap what we've learned today. The money a country uses is known as its currency. The rate of exchange tells you how much of one currency you have to pay for a certain amount of money in the other currency. The rate of exchange between countries differs a little from day to day. These rates are published daily in many newspapers. If the exchange rate is one US dollar is equal to seven Namibian dollars and 73 cents, then to convert US dollar to Namibian dollar, you have to multiply the amount of US dollar with 7.73 to get the answer in Namibian dollar. If you want to convert Namibian dollar to US dollar, you have to divide the amount of Namibian dollar with 7.73 to get the answer in US dollar. To calculate money earned, you have to calculate the money earned during normal hours plus the money earned for overtime. Simple interest is calculated with the following formula. I is equal to P multiplied by T multiplied by R divided by 100. Compound interest is when the interest for one year is added to the investment and the interest for the next year is calculated on the increased investment. This brings us to the end of today's lesson. The next lesson in our series on NSSCO mathematics will deal with ratio, proportion and rate. Goodbye.