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Advanced Business Calculations Level 3/series 4-2009

Advanced Business Calculations Level 3/series 4-2009

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Published by Hein Linn Kyaw

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Published by: Hein Linn Kyaw on Jul 01, 2010
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Model Answers
Series 4 2009 (3003)
For furtherinformationcontact us:Tel. +44 (0) 8707 202909Email. enquiries@ediplc.comwww.lcci.org.uk
LCCI International Qualifications
Advanced BusinessCalculationsLevel 3
 
Page 1 of 9
Advanced Business Calculations Level 3
Series 4 2009
How to use this booklet
Model Answers have been developed by EDI to offer additional information and guidance to Centres,teachers and candidates as they prepare for LCCI International Qualifications. The contents of thisbooklet are divided into 3 elements:(1) Questions
 –
reproduced from the printed examination paper(2) Model Answers
 –
summary of the main points that the Chief Examiner expected tosee in the answers to each question in the examination paper,plus a fully worked example or sample answer (where applicable)(3) Helpful Hints
 –
where appropriate, additional guidance relating to individualquestions or to examination techniqueTeachers and candidates should find this booklet an invaluable teaching tool and an aid to success.EDI provides Model Answers to help candidates gain a general understanding of the standardrequired. The general standard of model answers is one that would achieve a Distinction grade. EDIaccepts that candidates may offer other answers that could be equally valid. © Education Development International plc 2009All rights reserved; no part of this publication may be reproduced, stored in a retrieval system ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwisewithout prior written permission of the Publisher. The book may not be lent, resold, hired out orotherwise disposed of by way of trade in any form of binding or cover, other than that in which it ispublished, without the prior consent of the Publisher.
 
3003/4/09/MA Page 2 of 9
QUESTION 1
Natalia deposits £45,000 in a bank account at 3% per annum
simple interest
.(a) How much interest will Natalia have earned after 2 years and 3 months?(3 marks)Natalia deposits a further £45,000 in another account at 2.85% per annum
compound interest
, alsofor a period of 2 years and 3 months. Interest is added annually and at the end of the period, and iscalculated as
compound interest
throughout.(b) How much less interest will Natalia have earned from this account than from the simple interestaccount?(5 marks)Natalia invests a further amount at
compound interest
of 3.1% per annum for 3 years. At the end ofthe period, the amount (principle plus interest) is £30,137.60.(c) Calculate the sum initially invested.(3 marks)(d) Calculate the rate of simple interest that would give the same interest on this initial amount over 3years.(3 marks)
(Total 14 marks)MODEL ANSWER TO QUESTION 1
(a) 2 years + 3 months = 2.25 yearsInterest = PRT/100 = £45,000 x 2.25 x 3 / 100 = £3,037.50(b) Amount = Principle x (1 + percentage rate)
Number of years
 Amount = £45,000 x (1.0285)
2.25
= £47,937.15Interest = £47,937.15
 –
£45,000 = £2,937.15Less than simple interest by: £3,037.50 - £2,937.15 = £100.35(c) Initial investment = £30,137.60 / (1 + 0.031)
3
= £27,500(d) Interest = £30,137.60 - £27,500 = £2,637.60Rate of simple interest = 100 x £2,637.60 / (3 x £27,500) = 3.2%

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