Profit, Loss and Interest

Overview

Profit, Loss and Interest forms a core quantitative topic in TN TET Mathematics, appearing consistently in both Paper I and Paper II. This topic tests your ability to apply percentage concepts to real-world commercial transactions—buying and selling goods, lending and borrowing money. Mastery here builds the foundation for teaching students how mathematics connects to everyday life, from shopkeepers calculating margins to banks computing loan repayments.

For TN TET, expect 2–4 questions from this area. Problems typically involve straightforward calculations of profit/loss percentages, finding cost or selling price, and computing simple or compound interest for given periods. The pedagogy angle also matters—you should understand how to teach these concepts using real-life examples and help students avoid common calculation errors.

Success requires memorising key formulas, understanding their derivations, and practising quick mental calculations since exam time is limited.

Key Concepts

• **Cost Price (CP)** is the amount paid to acquire an item; **Selling Price (SP)** is the amount received when selling it. The relationship between these determines profit or loss.

• **Profit occurs when SP > CP**; the gain equals SP − CP. **Loss occurs when SP < CP**; the loss equals CP − SP.

• **Profit and Loss percentages are always calculated on Cost Price**, not Selling Price—this is the standard convention unless stated otherwise.

• **Marked Price (MP)** is the listed/labelled price; **Discount** is the reduction from MP. So SP = MP − Discount.

• **Simple Interest (SI)** is calculated only on the original principal—interest does not earn further interest.

• **Compound Interest (CI)** is calculated on principal plus accumulated interest—"interest on interest" effect causes faster growth.

• **The difference between CI and SI for 2 years** equals SI for one year multiplied by the rate, divided by 100. This shortcut saves time.

• **Successive discounts** are not additive—two discounts of 10% and 20% do not equal 30%. Apply them sequentially.

Formulas / Key Facts

**Profit and Loss:**

• Profit = SP − CP
• Loss = CP − SP
• Profit % = (Profit / CP) × 100
• Loss % = (Loss / CP) × 100
• SP = CP × (100 + Profit%) / 100 ... when profit is made
• SP = CP × (100 − Loss%) / 100 ... when loss is incurred
• CP = SP × 100 / (100 + Profit%) ... finding CP from SP and profit%