VCE SCHOOL ASSESSED COURSEWORK

Name:
Subject & Unit: Year 12 General Mathematics
Subject Teacher: Ms Cooper, Mr Elias, Mr Haniff, Mrs Khatri
Area of Study: Unit 3 – Core – Recursion and Financial Modelling
SAC Name and # Blake - Part 1
Due Date: 25th May, 2023
Conditions and  Pens, pencils, eraser, highlighters, ruler, sharpener
allowable  Calculator (scientific/CAS)
materials:  Reference book
This paper:
Marks allocated
Outcomes
Marks available: Outcome 1 7
Outcome 2 12
Outcome 3 9
TOTAL MARKS 28

STUDENT DECLARATION:
I declare that the work submitted in relation to this task is all my own and
I have not received unwarranted assistance from teachers, tutors or
anyone else prior to its completion. My work has been completed
according to the guidelines set by my teacher and school and in
accordance with rules set down by the VCAA. I understand that the
submission of part, or all, of someone else’s work constitutes plagiarism
and I accept the consequences which will be imposed should I do so.

Student signature: __________________________________ Date: ___________

Criterion
Appropriate use of mathematical conventions, symbols and terminology
 Model and analyse growth and decay in financial contexts using a first-order linear recurrence
relation of the form u0 =a , un+1 =b un +c
 Use a rule for the future value of a compound interest investment or loan, or a depreciating
asset, to solve practical problems
Definition and explanation of key concepts
 The concepts of financial mathematics including simple and compound interest.
 Find the present value or future value of a compound interest investment or loan.
 Use an amortisation table to investigate an annuity.
Accurate use of mathematical skills and techniques
 With the aid of technology with financial mathematics capabilities, solve practical problems
associated with compound interest investments and reducing balance loans.
 Use a table to investigate and analyse on a step–by-step basis the amortisation of a reducing
balance loan

Outcome 2 (10 marks) Select and apply the mathematical concepts, models and techniques from
Recursion and financial modelling in a range of contexts of increasing complexity.
Criterion
Identification of important information, variables and constraints
 General formulation of the concepts, techniques and models studied in recursion and financial
modelling.
 Identify, recall and select facts, concepts, models and techniques needed to investigate.
Application of mathematical ideas and content from the specified areas of study
 Select and implement standard financial models to investigate and analyse a financial situation
that requires the use of increasingly sophisticated models to complete the analysis.
 Analyse changes to a financial situation and investigate what effect these changes can have.
Analysis and interpretation of results
 Assumptions and conditions underlying the use of the concepts, techniques, and models
associated with recursion and financial modelling.
 Interpret and report the results of completing a modelling task in terms of the context under
consideration, including discussing the assumptions in application of these models.

Outcome 3 (5 marks) Select and appropriately use numerical, graphical, symbolic and statistical
functionalities of technology to develop mathematical ideas, produce results and carry out analysis in
situations requiring problem-solving, modelling or investigative techniques or approaches.

Criterion
Appropriate selection and effective use of technology
 Use technology to carry out numerical, graphical and symbolic computation as applicable
 Select an appropriate functionality of technology in a variety of mathematical contexts, related
to data analysis, recurrence relations and financial modelling, and provide a rationale for these
selections
Application of technology
 Apply suitable constraints and conditions, as applicable, to carry out required computations
 Produce results using a technology which identify examples or counter-examples for propositions
 Produce tables of values, families of graphs and collections of other results using technology,
which support general analysis in the modelling context

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Blake would like to go on a long-awaited holiday to Turkey but will need to save some
money for the trip.

She currently has $8 000 in a savings account with Daredevil Bank. For her upcoming birthday
Blake has asked for a lump sum of cash as her gift as she wishes to go on a holiday to Turkey
in 2026.

In 2023, she will invest her initial $8000 plus the gift money into an account to increase her
savings.

a. Blake received a total of $1000 from her generous family members. State the amount she
will invest. (O1: 1 mark)

Daredevil Bank offers three different types of investment accounts given in the table below.

SAVINGS ACCOUNT A SAVINGS ACCOUNT B SAVINGS ACCOUNT C

6.1% p.a. simple interest. 6.01% p.a. compounding 4.94% p.a. compounding
yearly fortnightly

b. Write a recurrence relation which models each case. Round your answers to 4 decimal
places where appropriate. (O1: 3 marks, O2: 3 marks)

Savings Account A:

Savings Account B:

Savings Account C:

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c. If Blake invested for three years, investigate the outcome of each investment. Comment
on which account you would advise Blake to deposit her money. Give a reason to
support your choice. (O2: 1 mark; O3: 3 marks)

Savings Account A:

Savings Account B:

Savings Account C:

Comment:

d. Calculate the effective interest rate for options B and C. Round your answers to 2
decimal places where appropriate. (O3: 2 marks)

e. Comment if your answer from part (d) supports your conclusion and advice given in part
(c)? (O2: 1 mark)

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Blake followed your recommendation in part (c) and invested in this account for the three-
year period. By the time her birthday comes around in 2026, there is a worldwide pandemic
which restricts travel. So, Blake decides to purchase an old caravan and travel locally. The
caravan is $18 500.

Blake is considering two possibilities.

Option 1:
She could use the total amount of money from her investment in part (c) as a deposit for the
caravan and borrow the rest of the money.

Her bank offers a reducing balance loan with an annual interest rate of 10.6% compounding
monthly.

f. How much will Blake have to borrow from the bank? (O1: 1 mark)

Blake plans to have the caravan paid off by her birthday in 2027. She will make regular
monthly payments followed by a final payment that is different from her regular monthly
payment.

g. Find the value of Blake’s regular monthly payment. (O3: 1 mark)

h. What will be the value of Blake’s final payment? (O2: 1 mark, O3: 1 mark)

i. How much interest, to the nearest dollar, was paid on the loan altogether? (O2: 1 mark)

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Option 2:

Blake could take the money from her investment in part (c) and reinvest the total amount
into a new savings account with compound interest investment earning 4.2% per annum,
compounding monthly and she could borrow the entire $18 500 at 10.6% p.a. compounding
monthly.

Like in option 1, Blake plans to have the caravan paid off by her birthday in 2027. She will
make regular monthly payments followed by a final payment that is different from her regular
monthly payment.

j. Find the value of Blake’s regular monthly payment. (O3: 1 mark)

k. What will be the value of Blake’s final payment? (O2: 1 mark, O3: 1 mark)

l. How much interest, to the nearest ten dollars, was paid on the loan altogether?
(O2: 1 mark)

m. How much interest, to the nearest ten dollars, is earned from Blake’s reinvestment?
(O1: 1 mark, O2: 1 mark)

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n. Compare the total interest paid for the two options and suggest which option Blake
should choose and how much interest, to the nearest ten dollars, she would save.
(O1: 1 mark, O2: 2 marks)

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