Business Mathematics and Statistics
This domain covers quantitative tools for business decisions: percentages, ratios, interest (simple and compound), discounting, present and future value, and basic statistics - measures of central tendency (mean, median, mode), dispersion (range, variance, standard deviation), and probability. Candidates should be comfortable interpreting data and applying formulas accurately.
Traps to watch
- Mixing simple and compound interest; compounding grows faster.
- Using the wrong base when calculating percentage change (divide by the original value).
- Confusing mean and median when data are skewed; the median resists outliers.
- Forgetting to convert percentages to decimals in formulas.
- Discounting errors: dividing by (1+r)^n rather than multiplying.
Worked example
Find the future value of 1,000 invested at 10% compound interest for 2 years. FV = 1,000 × (1.10)^2 = 1,000 × 1.21 = 1,210. Simple interest would give 1,000 + (1,000 × 0.10 × 2) = 1,200. The 10 difference is interest on interest.
Rule of thumb
For present value, PV = FV / (1+r)^n. For percentage change, (new − old) / old × 100. Always state units and round consistently.