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Advanced Business Calculations Level 3/Series 4 2008 (3003)

# Advanced Business Calculations Level 3/Series 4 2008 (3003)

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Published by: Hein Linn Kyaw on Jul 06, 2010

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11/22/2014

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Series 4 2008 (3003)
For further informationcontact us:Tel. +44 (0) 8707 202909Email. enquiries@ediplc.comwww.lcci.org.uk
LCCI International Qualifications

Series 4 2008
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3003/4/08/MA Page 1 of 9
QUESTION 1
Rajesh deposits £15,000 in a bank account at 4% per annum simple interest.(a) How much interest will Rajesh have earned after 3 years and 56 days?(4 marks)Rajesh deposits a further £15,000 in another account at 4% per annum compound interest, for thesame period. Interest is added annually and at the end of the period, and is calculated as compoundinterest throughout.(b) How much more interest will Rajesh have earned from this account than from the simple interestaccount?(6 marks)
(Total 10 marks)MODEL ANSWER TO QUESTION 1
(a) 56 days = 56 / 365 years = 0.15342466 yearsInterest = PRT/100 = 15,000 x 4 x 3.15342466 / 100 = £1,892.05(b) Amount = Principle x (1 + percentage rate)
Number of years
Amount = 15,000 x (1.04)
3.15342466
= £16,974.80Interest = 16,974.80 – 15,000 = £1,974.80Greater than simple interest by: 1,974.80 - 1,892.05 = £82.75

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