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QCF256 Simple and Compound Interest Exercises

This document contains 11 questions regarding financial maths concepts such as simple and compound interest, present and future value of investments, appreciation and depreciation. The questions cover calculations for interest, balances, rates and values over various time periods and conditions.

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tranphuckhang.0101
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29 views2 pages

QCF256 Simple and Compound Interest Exercises

This document contains 11 questions regarding financial maths concepts such as simple and compound interest, present and future value of investments, appreciation and depreciation. The questions cover calculations for interest, balances, rates and values over various time periods and conditions.

Uploaded by

tranphuckhang.0101
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Page 1 of 2 QCF256

FINANCIAL MATHS

QUESTION 1

For each of the following, calculate the


(i) simple interest (ii) final account balance
(a) $1250 invested at 4 % p.a. for 6 years
(b) $6800 invested at 2.5 % p.a. for 4 years
(c) $7200 invested at 5.4 % p.a. for 18 months
(d) $2400 invested at 6.2 % p.a. for 3 months
(e) $3500 invested at 8.6 % p.a. for 14 days

QUESTION 2

For each of the following, calculate the


(i) final account balance (ii) interest earned
(a) $2 750 compounded annually at 9%p.a. for 7 years
(b) $3 690 compounded semi-annually at 8% p.a. for 4 years
(c) $1 240 compounded quarterly at 6 % p.a. for 5 years
(d) $5 400 compounded monthly at 4.8 % p.a. for 3 years
(e) $8 500 compounded daily at 7.3% p.a. for 2 years

QUESTION 3

(a) $2 500 accumulates to $4 400 after 4 years. What is the compounded yearly interest
rate?
(b) After 8 years $1 000 accumulates to $3 000. What is the compounded yearly interest
rate?

QUESTION 4 (Use your graphics calculator for this Q)

(a) How long would it take for $9 000 to accumulate to at least $15 000 at
16% p.a. compounded yearly interest?
(b) How long would it take to double the money I invest, at 8% p.a. compounding monthly?

QUESTION 5

Find the effective rate of interest for each of the following


(a) 8 % p.a. compounded semi-annually
(b) 6 % p.a. compounded quarterly
(c) 5.4 % p.a. compounded monthly
(d) 4.8 % p.a. compounded daily

QUESTION 6

Which is the best investment?


A: 7.3 % p.a. compounded daily B: 7.4 % p.a. compounded quarterly
Which is the best loan rate?
C: 9.6 % p.a. compounded quarterly D: 9.5 % p.a. compounded weekly

CRICOS NO 00213J
Page 2 of 2 QCF256

QUESTION 7

Tim purchases a sports car for $80000. He pays 20% deposit, with the remainder to be paid
off monthly as a loan over 6 years at a flat rate of interest of 8.5% p.a.
(a) Calculate the total simple interest he will pay
(b) Estimate the effective rate of interest
(c) Calculate the total amount he will pay for the car.

QUESTION 8

(a) A painting purchased for $2840 appreciates in value at 8.5 % p.a., find its value after 6
years.
(b) An antique vase purchased for $1560 appreciates in value at 12 % p.a., find its value after
8 years.
(c) In 1965, an autographed photo of the Beatles was worth $50, if it has appreciated in
value by 20 % p.a. what is it now worth?

QUESTION 9

(a) A new computer system is purchased for $3,200 depreciates at 25% p.a., find its book
value after 5 years.
(b) A new car is purchased for $28,000 depreciates at 14% p.a., find its book value after 9
years.
(c) A new photo-copier is purchased for $12,000 depreciates at 12.5% p.a. find its book
value after 7 years.

QUESTION 10

(a) Find the future value of $20 000 in 5 years time at a compound rate of 13% p.a.
(b) Find the future value of $9 750 in 7 years time at a compound rate of 12.5% p.a.
(c) Assuming an annual inflation rate of 6% p.a., how much will an item that presently costs
$100 cost in 5 years time?

QUESTION 11

(a) At a compound rate of 15% p.a., what is the present value of $100 000 due in 20 years
time?
(b) Mr. Cash has agreed to pay back $23 000 in 6 years time, if the discount rate is
14.5%p.a., what would be the present value?
(c) What is the present value of equal payments of $1000 at the end of 1, 2 and 3 years at a
discount rate of 10.5% p.a?

ANSWERS
Q.1 (a) $300, $1550 (b) $680, $7480 (c) $583.20, $7783.20 (d) $37.20, $2437.20 (e) $11.55, $3511.55
Q.2. (a) $5027.11, $2277.11 (b) $5050.02, $1360.02 (c) $1670.10, $430.10 (d) $6234.58, $834.58 (e) $9836.02, $1336.02
Q.3. (a) 15.18% (b) 14.72% Q.4. (a) 3.44 years (b) 8 years 9 months
Q.5. (a) 8.16% (b) 6.14% (c) 5.54% (d) 4.92% Q.6. B (7.61% > 7.57%) C. (9.951% < 9.956%)
Q. 7 (a) $32640 (b) 16.8% (c) $112640
Q.8. (a) $4 633.37 (b) $3 862.50 Q.9 (a)$759.38 (b)$7205.17 (c)$4712.35
Q.10. (a) $36 848.70 (b) $22 236.80 (c) $133.82
Q.11. (a) $6 110.03 (b) $10 206.92 (c) $2465.12

CRICOS NO 00213J

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