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FINANCIAL MATHEMATICS
SIMPLE INTEREST

EXERCISES:
1.

2.

COMPOUND INTEREST

EXERCISES:
1.

2.
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MIXED EXERCISES:
3.

4.

5. CALCULATING n.

6. CALCULATING i.

HIRE PURCHASE AGREEMENTS

EXERCISE:
1.

2.
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INFLATION AND POPULATION GROWTH

1.

2.

3.

CALCULATION OF INTEREST RATES

EXERCISES:
1.

COMPOUND INTEREST OVER DIFFERENT TIME PERIODS

EXERCISES:
1.
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2.

CHANGING INTEREST RATES:

EXERCISES:
1.

2.

TIMELINES:

EXERCISES:
1.
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2.

CHANGING INTEREST RATES, DEPOSITS AND WITHDRAWALS:

1.

LOAN REPAYMENTS:
EXERCISE:
1.

NOMINAL AND EFFECTIVE INTEREST RATES:

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NOT ON NSC INFORMATION SHEET

EXERCISES:
1.

2.

3.

DEPRECIATION:
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EXERCISES:
1.

2.

3.

4.
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GRADE 12
CALCULATING THE TIME PERIOD OF A LOAN OR INVESTMENT:
EXERCISES:
1a.

1b.

2.

INVESTMENTS OR LOANS INVOLVING ANNUITIES

EXERCISES:
1.
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2.

3.

4.

5.

6.
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7.

ANNUITY PAYMENTS MADE IN ADVANCE

EXERCISES:
1.

2.

PRESENT VALUE ANNUITIES:

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EXAMPLE:
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EXERCISES:
1.

2.

3.
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4.

THE BALANCE OUTSTANDING ON A LOAN AT ANY GIVEN TIME:

EXERCISES:
1.

SINKING FUNDS:
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EXERCISE:

OUTSTANDING BALANCE
Used when the total period of the loan is not given!
𝑥[(1 + 𝑖) − 1]
Oustanding Balance = 𝑃(1 + 𝑖) −
𝑖

Loan to date Repayments with interest to date

(Compound formula)
(Future Value formula)

Example
Jax took out a loan of R250 000. He wants to make monthly payments of R5 000 on the loan. The interest on
the loan is calculated on 15% p.a. compounded monthly. What is the outstanding balance on the loan after 3
years (directly after the payment made at the end of the 3rd year)?

𝑥[(1 + 𝑖) − 1]
OB = 𝑃(1 + 𝑖) −
𝑖
15
15 5000[ 1 + − 1]
𝑂𝐵 = 250000 1 + − 100 × 12
100 × 12 15
100 × 12
∴ 𝑂𝐵 = 165408,43
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LAST PAYMENT
Example
George has to repay a loan of R375 000. The interest rate is 14% p.a. compounded monthly. He pays back a
fixed amount of R7 500 per month.
a) How many payments will George have to make?
b) What will his last payment be?

[ ( ) ]
a) 𝑃 =

×
∴ 375 000 =
×
×
×
=1− 1+
×
×
×
1+ =1−
×

=
∴ −𝑛 = 𝑙𝑜𝑔
∴ −𝑛 = −75,477706563
∴ 𝑛 = 75,477706563

[( ) ]
b) 𝑂𝐵 = 𝑃 (1 + 𝑖) −
14
14 75000[ 1 + − 1]
𝑂𝐵 = 375 000 1 + − 100 × 12
100 × 12 14
100 × 12
𝑂𝐵 = 3 547,457499
∴ Last payment = 𝑃 (1 + 𝑖)
14
Last payment = 3 547,457499 1 +
100 × 12
Last payment = 𝑅3588,84