FINANCIAL MATHEMATICS WORKSHEET 2

(for Casio Graphics Calculators – TVM Mode)

NOTE: The questions with a # at the end should provide an interesting answer when compared to the
previous question!! NAME: _____________________________

INVESTIGATING LONG-TERM iv. How much would this investment

INVESTMENTS strategy give you by the time you
You are an HSC student and decide turned 80? (assuming you live that
that you will start saving some money long!) #
for the future.
1. INVESTMENT SCENARIO ONE: n =
You decide to deposit $200 into an I% =
account every 6 months. The account PV =
pays 6% pa, compounding 6 monthly. PMT =
i. How much will you have in the FV =
account in 10 years time? P/Y =
C/Y =
n = ANSWER =
I% =
PV = 2. INVESTMENT SCENARIO TWO:
PMT = Rather than depositing $200 into an
FV = account every 6 months, let’s say a
P/Y = generous relative gave you $20 000 to
C/Y = invest in a long term account. You
ANSWER = decide to invest the $20 000 at 6% pa,
compounding monthly, without
ii. If you maintained this investment making any additional contributions
strategy, how much would be in this into the account.
account after 30 years? (when you are
about age 47) # i. How much will the $20 000 grow to
n = in 10 years?
I% =
PV = n =
PMT = I% =
FV = PV =
P/Y = PMT =
C/Y = FV =
ANSWER = P/Y =
C/Y =
iii. How much would be in this account ANSWER =
after 50 years? (when you are about
age 67) #
n =
I% =
PV =
PMT =
FV =
P/Y =
C/Y =
ANSWER =

1
ii. How much will the $20 000 grow to v. How much will the $20 000 grow to
in 30 years at 6% pa compounding in 50 years if the interest rate was 18%
monthly? # pa, compounding monthly? ##
(ie when you are about age 47)
n =
n = I% =
I% = PV =
PV = PMT =
PMT = FV =
FV = P/Y =
P/Y = C/Y =
C/Y = ANSWER =
ANSWER =

vi. Does the interest rate make a much

of a difference to the future value over
iii. How much will be in this account a long period of time? Explain.
in 50 years? (ie when you are about 67
years of age) #

n =
I% =
PV =
PMT =
FV =
P/Y =
C/Y =
ANSWER = vii. In part (v) (at the top of this
column) we looked at investing
$20 000 over 50 years at 18% pa,
compounding monthly. How much
iv. How much will the $20 000 grow to more will the investment grow to if the
in 50 years if the interest rate was 12% 18% is compounded daily? Would you
pa, compounding monthly (instead of say the effect of the interest
6% pa, as before)? ## compounding daily compared to
monthly makes a significant difference
n = over 50 years? ##
I% =
PV = n =
PMT = I% =
FV = PV =
P/Y = PMT =
C/Y = FV =
ANSWER = P/Y =
C/Y =
WORKING:

ANSWER:

2
3. INVESTMENT SCENARIO 3:
Your generous relative gives you
$20 000 and you invest this at 6% pa,
compounding monthly for 10 years. By
this time you are around 27 years of
age. You then decide to make monthly
contributions into the account.
The interest rate changes once you
start making payments (now you have
enough money to attract a higher
interest rate). Now you make monthly
payments of $200 at 12% pa interest,
compounding monthly.
i. How much will your account be
worth after 10 years of making
payments (by the time you are approx
37 years old).
n =
I% =
PV =
PMT =
FV =
P/Y =
C/Y =
ANSWER =
iii. How much would this account
grow to if you contribute the $200 per
month for 50 years (you would be
approx 77 years old)? #
n =
I% =
PV =
PMT =
FV =
P/Y =
C/Y =
ANSWER =
iv. Let’s see what happens if we
increase the monthly payment.
Let’s assume that after letting the
$20 000 grow for 10 years at 6% pa
interest compounded monthly (the start
of this investment scenario) you then
make monthly contributions of $800
per month (rather than $200 per
month) at 12% pa interest
compounding monthly. How much will
your account grow to after making
$800 monthly contributions for 10
years (you would be approximately 37
years old)? #

ii. How much will this account grow to n =

if you contribute the $200 per month I% =
for 30 years (you would be approx 57 PV =
years old)? ## PMT =
FV =
n = P/Y =
I% = C/Y =
PV = ANSWER =
PMT =
FV =
P/Y =
C/Y =
ANSWER =

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v. How much will your account grow THINKING ABOUT INVESTING.
to after making monthly contributions
of $800 for 30 years (you would be 10a. What is this worksheet telling you
approximately 57 years old) about investing long term from a
young age.
n =
I% =
PV =
PMT =
FV =
P/Y =
C/Y =
ANSWER =

vi. What about over 50 years? #

b. What is this worksheet telling you
n = about the significance of making
I% = regular contributions when investing
PV = money for a long period of time (with
PMT = compound interest).
FV =
P/Y =
C/Y =
ANSWER =

vii. What if this investment could have

grown at 15% pa, compounding
monthly over 50 years? #

n =
I% =
PV = c. Has this worksheet caused you to
PMT = think about long-term investing for
FV = yourself?
P/Y =
C/Y =

4
 FINANCIAL MATHEMATICS WORKSHEET 2
(for Casio Graphics Calculators – TVM Mode)
NOTE: The questions with a # at the end should provide an interesting answer when compared to the
previous question!! SOLUTIONS
INVESTIGATING LONG-TERM iv. How much would this investment
INVESTMENTS strategy give you by the time you
You are an HSC student and decide turned 80? (assuming you live that
that you will start saving some money long!) #
for the future. n = (80-‘your age(17)’)x2
I% = 6
1. INVESTMENT SCENARIO ONE: PV = 0
You decide to deposit $200 into an PMT = -200
account every 6 months. The account FV = ?
pays 6% pa, compounding 6 monthly. P/Y = 2
i. How much will you have in the C/Y = 2
account in 10 years time? ANSWER = $269 644.89
n = 10x2 = 20
I% = 6 2. INVESTMENT SCENARIO TWO:
PV = 0 Rather than depositing $200 into an
PMT = -200 account every 6 months, let’s say a
FV = ? generous relative gave you $20 000 to
P/Y = 2 invest in a long term account. You
C/Y = 2 decide to invest the $20 000 at 6% pa,
ANSWER = $5 374.07 compounding monthly, without
making any additional contributions
ii. If you maintained this investment into the account.
strategy, how much would be in this
account after 30 years? (when you are i. How much will the $20 000 grow to
about age 47) # in 10 years?
n = 30x2 = 60 n = 10 x 12 = 120
I% = 6 I% = 6
PV = 0 PV = -20 000
PMT = -200 PMT = 0
FV = ? FV = ?
P/Y = 2 P/Y = 12
C/Y = 2 C/Y = 12
ANSWER = $32 610.69 ANSWER = $36 387.93
iii. How much would be in this account
after 50 years? (when you are about
age 67) #
n = 50x2 = 100
I% = 6
PV = 0
PMT = -200
FV = ?
P/Y = 2
C/Y = 2
ANSWER = $121 457.55

5
ii. How much will the $20 000 grow to v. How much will the $20 000 grow to
in 30 years at 6% pa compounding in 50 years if the interest rate was 18%
monthly? # pa, compounding monthly? ##
(ie when you are about age 47) n = 50 x 12 = 600
n = 30 x 12 = 360 I% = 18
I% = 6 PV = -20 000
PV = -20 000 PMT = 0
PMT = 0 FV = ?
FV = ? P/Y = 12
P/Y = 12 C/Y = 12
C/Y = 12 ANSWER = $151 584 691.80
ANSWER = $120 451.50 (151½ million dollars !!!!!)

vi. Does the interest rate make a much

of a difference to the future value over
iii. How much will be in this account a long period of time? Explain.
in 50 years? (ie when you are about 67 The interest rate makes a significant
years of age) # difference over a long period of time.
n = 50 x 12 = 600 In the last example the $20 000
I% = 6 investment grew by over $140
PV = -20 000 million extra with an 18% pa
PMT = 0 interest rate over 50 years compared
FV = ? to an interest rate of 12% pa!
P/Y = 12
C/Y = 12 vii. In part (v) (at the top of this
ANSWER = $398 719.11 column) we looked at investing
$20 000 over 50 years at 18% pa,
compounding monthly. How much
more will the investment grow to if the
iv. How much will the $20 000 grow 18% is compounded daily? Would you
to in 50 years if the interest rate was say the effect of the interest
12% pa, compounding monthly compounding daily compared to
(instead of 6% pa, as before)? ## monthly makes a significant difference
n = 50 x 12 = 600 over 50 years? ##
I% = 12 n = 50 x 365 = 18250
PV = -20 000 I% = 18
PMT = 0 PV = -20 000
FV = ? PMT = 0
P/Y = 12 FV = ?
C/Y = 12 P/Y = 365
ANSWER = $7 831 667.94 !! C/Y = 365

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
WORKING:
FV = $161 702 551.50
161 702 551.50 - 151 584 691.80
ANSWER: The effect of the interest
compounding daily rather than
monthly in this situation is
$10 117 859.72 (over 10 million
dollars difference!!)

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3. INVESTMENT SCENARIO 3: iii. How much would this account
grow to if you contribute the $200 per
Your generous relative gives you month for 50 years (you would be
$20 000 and you invest this at 6% pa, approx 77 years old)? #
compounding monthly for 10 years. By n = 50x12 = 600
this time you are around 27 years of I% = 12
age. You then decide to make monthly PV = -36 387.93
contributions of $200 into the account. PMT = -200
The interest rate changes once you FV = ?
start making the payments (now you P/Y = 12
have enough money to attract a higher C/Y = 12
interest rate). The new interest rate is ANSWER = $22 060 577.18 !!!!
12%, compounding monthly. (over 22 million dollars!!)

i. How much will your account be iv. Let’s see what happens if we
worth after 10 years of making increase the monthly payment.
payments (by the time you are approx Let’s assume that after letting the
37 years old). $20 000 grow for 10 years at 6% pa
interest compounded monthly (the start
(The first part – compound interest for of this investment scenario) you then
10 yrs @ 6% - gives you $36 387.93) make monthly contributions of $800
n = 10x12 = 120 per month (rather than $200 per
I% = 12 month) at 12% pa interest
PV = -36 387.93 compounding monthly. How much
PMT = -200 will your account grow to after making
FV = ? $800 monthly contributions for 10
P/Y = 12 years (you would be approximately 37
C/Y = 12 years old)? #
ANSWER = $166 101.99 n = 10 x 12 = 120
I% = 12
PV = -36 387.93
ii. How much will this account grow to PMT = -800
if you contribute the $200 per month FV = ?
for 30 years (you would be approx 57 P/Y = 12
years old)? ## C/Y = 12
n = 30x12 = 360
I% = 12 ANSWER = $304 125.20
PV = -36 387.93 v. How much will your account grow
PMT = -200 to after making monthly contributions
FV = ? of $800 for 30 years (you would be
P/Y = 12 approximately 57 years old)? #
C/Y = 12 n = 30x12 = 360
ANSWER = $2 007 125.86 I% = 12
(2 million dollars!) PV = -36 387.93
PMT = -800
FV = ?
P/Y = 12
C/Y = 12
ANSWER = $4 104 104.34

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vi. What about over 50 years? # THINKING ABOUT INVESTING.
n = 50x12 = 600
I% = 12 a. What is this worksheet telling you
PV = -36 387.93 about investing long term from a
PMT = -800 young age.
FV = ?
P/Y = 12
C/Y = 12
ANSWER = $45 495 581
(45 million dollars!!!)

vii. What if this investment could have

grown at 15% pa, compounding
monthly over 50 years? #

n = 50x12 = 600
I% = 15 b. What is this worksheet telling you
PV = -36 387.93 about the significance of making
PMT = -800 regular contributions when investing
FV = ? money for a long period of time (with
P/Y = 12 compound interest).
C/Y = 12
ANSWER = $173 196 926
(173 million dollars!!!)

c. Has this worksheet caused you to

think about long-term investing for
yourself?