1.

Angela needs $4000 to pay for a car. She was given two options by the car seller. Option A: Outright Loan A loan of $4000 at a rate of 12% per annum compounded monthly. (a) Find (i) (ii) the cost of this loan for one year;
(2)

the equivalent annual simple interest rate.

(2)

Option B: Friendly Credit Terms A 25% deposit, followed by 12 equal monthly payments of $287.50. (b) (i) (ii) How much is to be paid as a deposit under this option?
(1)

Find the cost of the loan under Friendly Credit Terms.

(2)

(c)

Give a reason why Angela might choose (i) (ii) Option A Option B
(2)

To help Angela, her employer agrees to give her an interest free loan of $4000 to buy the car. The employer is to recover the money by making the following deductions from Angelas salary: $x in the first month, $y every subsequent month. The total deductions after 20 months is $1540 and after 30 months it is $2140. (d) Find x and y.
(4)

(e)

How many months will it take for Angela to completely pay off the $4000 loan?
(2) (Total 15 marks)

2.

Miranti deposits $1000 into an investment account that pays 5% interest per annum. (a) What will be the value of the investment after 5 years if the interest is reinvested?
(2)

(b)

How many years would it take Mirantis investment of $1000 to double in value?
(4)

At the beginning of each year Brenda deposits $1000 into an investment account that pays 5% interest per annum. Interest is calculated annually and reinvested. (c) How much would be in Brendas account after 5 years?
(4) (Total 10 marks)

3.

The table shows part of a currency conversion chart. For example GBP 1 is equivalent to FFR 8.33. GBP GBP USD FFR 1 0.64 0.12 USD p 1 0.19 FFR 8.33 q l

For all calculations in this question give your answers correct to two decimal places. (a) Calculate the value of (i) (ii) p; q.
(4)

(b)

Joe has USD 1500 to exchange at a bank. (i) Assuming no commission is charged, how much in GBP will Joe receive from the bank?
(2)

(ii)

Assuming the bank charges 1.5% commission, (a) how much in GBP does Joe pay in commission?
(1)

(b)

how much in GBP does Joe actually receive for his USD 1500?
(1)

(c)

Joe decides to invest GBP 700 of his money in a savings account which pays interest at 5%, compounded annually. (i) How much interest will the GBP 700 earn after 4 years?
(2)

(ii)

For how many years must Joe invest his GBP 700 in order to earn at least GBP 200 in interest?
(2)

(d)

After 4 years Joe has a total of GBP 900 in his savings account on an investment at 5% interest compounded annually. How much did he invest? Give your answer to the nearest one GBP.
(2) (Total 14 marks)

4.

The following is a currency conversion table: FFR French Francs (FFR) US Dollars (USD) Japanese Yen (JPY) British Pounds (GBP) 1 6.289 0.057 9.901 USD p 1 0.009 1.585 JPY q 111.111 1 166.667 GBP 0.101 0.631 0.006 1

For example, from the table 1 USD = 0.631 GBP. Use the table to answer the following questions. (a) Find the values of p and q.
(2)

(b)

Mireille wants to change money at a bank in London. (i) (ii) How many French Francs (FFR) will she have to change to receive 140 British Pounds (GBP)? The bank charges a 2.4% commission on all transactions. If she makes this transaction, how many British Pounds will Mireille actually receive from the bank?
(4)

(c)

Jean invested 5000 FFR in Paris at 8% simple interest per annum. Paul invested 800 GBP in London at 6% simple interest per annum. (i) (ii) (iii) (iv) How much interest in FFR did Jean earn after 4 years? How much interest in US Dollars did Paul earn after 4 years? Who had earned more interest after 4 years? Explain your reasoning in part (c) (iii).
(7) (Total 13 marks)

5.

Takaya invested 1000 JPY at 6.3% simple interest for 15 years. Morimi invested 900 JPY at 6.3% interest compounded annually for 15 years. Who had more money at the end of the 15th year? Justify your answer clearly.
(Total 5 marks)

6.

The table below shows the deposits, in Australian dollars (AUD), made by Vicki in an investment account on the first day of each month for the first four months in 1999. The interest rate is 0.75% per month compounded monthly. The interest is added to the account at the end of each month. Month January February March April (a) Deposit (AUD) 600 1300 230 710

Show that the amount of money in Vickis account at the end of February is 1918.78 AUD.
(3)

(b)

Calculate the amount of Australian dollars in Vickis account at the end of April.
(2)

Vicki makes no withdrawals or deposits after 1st April 1999. (c) How much money is in Vickis account at the end of December 1999?
(2)

From 1st January 2000 the bank applies a new interest rate of 3.5% per annum compounded annually. (d) In how many full years after December 1999 will Vickis investment first exceed 3300 AUD?
(2) (Total 9 marks)

10

7.

On Veras 18th birthday she was given an allowance from her parents. She was given the following choices. Choice A Choice B Choice C Choice D $100 every month of the year. A fixed amount of $1100 at the beginning of the year, to be invested at an interest rate of 12% per annum, compounded monthly. $75 the first month and an increase of $5 every month thereafter. $80 the first month and an increase of 5% every month.

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(a)

Assuming that Vera does not spend any of her allowance during the year, calculate, for each of the choices, how much money she would have at the end of the year.
(8)

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(b)

Which of the choices do you think that Vera should choose? Give a reason for your answer.
(2)

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(c)

On her 19th birthday Vera invests $1200 in a bank that pays interest at r% per annum compounded annually. Vera would like to buy a scooter costing $1452 on her 21st birthday. What rate will the bank have to offer her to enable her to buy the scooter?
(4) (Total 14 marks)

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8.

(i)

Celia has $20,000 to invest. There are two different options that she can choose. Option 1: The investment grows at a rate of 3.5% compound interest each year. Option 2: The total value of the investment increases by $800 each year. The money is to be invested for 15 years. (a) Complete the table below giving the values of the investments to the nearest dollar for the first 4 years.
(3)

Year Option 1 Option 2 (b) (c)

0 20 000 20 000

1 20 700 20 800

Calculate the values of each investment at the end of 15 years.

(4)

If Option 1 is chosen find the total number of complete years before the value of the investment is first greater than $25,000.
(2)

(d)

If Option 2 is chosen calculate the percentage increase in the investment for the final year.
(2)

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(ii)

Two more Options are available to Celia. After 7 years she can change the investment conditions. Option 3: If Celia has chosen Option 1 she can change and then receives $800 each year until the end of the 15 years. Option 4: If Celia has chosen Option 2 she can change and then receive 3.5% interest compounded annually. If Celia wishes to receive the maximum amount of money at the end of the 15 years which option should she choose?
(7) (Total 18 marks)

16

9.

Ali, Bob and Connie each have 3 000 USD (US dollar) to invest. Ali invests his 3 000 USD in a firm that offers simple interest at 4.5 % per annum. The interest is added at the end of each year. Bob invests his 3 000 USD in a bank that offers interest compounded annually at a rate of 4 % per annum. The interest is added at the end of each year. Connie invests her 3 000 USD in another bank that offers interest compounded half-yearly at a rate of 3.8% per annum. The interest is added at the end of each half year. (a) (b) (c) Calculate how much money Ali and Bob have at the beginning of year 7.
(6)

Show that Connie has 3 760.20 USD at the beginning of year 7.

(3)

Calculate how many years it will take for Bob to have 6 000 USD in the bank.
(3)

At the beginning of year 7, Connie moves to England. She transfers her money into a Bank there at an exchange rate of 1 USD = 0.711 GBP (British pounds). The bank charges 2% commission. (d) (i) (ii) Calculate, in USD, the commission that the bank charges. Calculate the amount of money, in GBP, that Connie transfers to the bank in England.
(5) (Total 17 marks)

17

10.

Alex invests 3600 euros in an account that pays a nominal rate of 5.4 % interest per year, compounding monthly. The interest is added to the account at the end of each month. (a) (b) Calculate the number of whole months it will take for Alexs investment to double.
(4)

(i) (ii)

Calculate the value of Alexs investment after nine years. Find the rate of simple interest per year that would give the same value for the investment after nine years.
(6) (Total 10 marks)

18

11.

Robert, who lives in the UK, travels to Belgium. The exchange rate is 1.37 euros to one British Pound (GBP) with a commission of 3 GBP, which is subtracted before the exchange takes place. Robert gives the bank 120 GBP. (a) Calculate correct to 2 decimal places the amount of euros he receives.
(3)

He buys 1 kilogram of Belgian chocolates at 1.35 euros per 100 g. (b) Calculate the cost of his chocolates in GBP correct to 2 decimal places.
(3) (Total 6 marks)

19

12.

Give all answers in this question correct to the nearest dollar Clara wants to buy some land. She can choose between two different payment options. Both options require her to pay for the land in 20 monthly installments. Option 1: Option 2: (a) The first installment is $2500. Each installment is $200 more than the one before. The first installment is $2000. Each installment is 8% more than the one before.

If Clara chooses option 1, (i) (ii) (iii) write down the values of the second and third installments; calculate the value of the final installment; show that the total amount that Clara would pay for the land is $88 000.
(7)

(b)

If Clara chooses option 2, (i) (ii) find the value of the second installment; show that the value of the fifth installment is $2721.
(4)

(c)

The price of the land is $80 000. In option 1 her total repayments are $88 000 over the 20 months. Find the annual rate of simple interest which gives this total.
(4)

(d)

Clara knows that the total amount she would pay for the land is not the same for both options. She wants to spend the least amount of money. Find how much she will save by choosing the cheaper option.
(4) (Total 19 marks)

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