Applied Arithmetic

Calculating Income Tax and Net Income

==Gross pay==

• Aka gross income
• Money earned ^^before deductions^^ are made

%%Net pay%%

• Aka net income it take-home income
• Money received ^^after deductions^^

Compound Interest

Formula: F=P(1+i)^t

• F: Final value (amount borrowed or invested + interest)
• P: Principal (amount borrowed or invested)
• i: Rate of interest per year (decimal form
• t: Time (years)

Income Tax and Standard Deductions

Income Tax

There are twp rates of income tax in Ireland

• The lower rate is called ^^the standard^^ rate
• The higher rate is called the ^^higher rate^^

Tax credit: the sum deducted from the gross tax a taxpayer owes to the state

Gross tax: the amount of tax owed to the state before tax credits are deducted

Tax payable: gross tax - tax credit

Statutory and Non-Statutory Deductions

Deductions can be statutory or non-statutory

• Statutory deductions: payments that must be made to the state
• Non-statutory deductions: payments employees make voluntarily such as insurance

Percentage Profit and Loss

• If something sells for more than it cost to produce it the seller has made a profit

• If something sells for less than it cost to produce it the seller has made a loss

==Percentage profit mark-up==

• expressed as a percentage of the cost of price
• percentage profit mark-up = profit/cost price x 100%
• profit = +
• loss = -

%%The percentage profit margin%%

• expressed as a percentage of the selling price
• percentage profit margin = profit/selling price x 100%