Finance [90 marks]

In this question, give all answers to two decimal places.

Bryan decides to purchase a new car with a price of €14 000, but cannot afford
the full amount. The car dealership offers two options to finance a loan.
Finance option A:
A 6 year loan at a nominal annual interest rate of 14 % compounded quarterly.
No deposit required and repayments are made each quarter.

1a. Find the repayment made each quarter. [3 marks]

1b. Find the total amount paid for the car. [2 marks]

1c. Find the interest paid on the loan. [2 marks]

Finance option B:
A 6 year loan at a nominal annual interest rate of r % compounded monthly.
Terms of the loan require a 10 % deposit and monthly repayments of €250.

1d. Find the amount to be borrowed for this option. [2 marks]

1e. Find the annual interest rate, r. [3 marks]

1f. State which option Bryan should choose. Justify your answer. [2 marks]

1g. Bryan’s car depreciates at an annual rate of 25 % per year. [3 marks]

Find the value of Bryan’s car six years after it is purchased.

2a. Find the repayment made each quarter. [3 marks]

2b. Find the total amount paid for the car. [2 marks]
2c. Find the interest paid on the loan. [2 marks]

2d. Find the amount to be borrowed for this option. [2 marks]

2e. Find the annual interest rate, r. [3 marks]

2f. State which option Bryan should choose. Justify your answer. [2 marks]

2g. Bryan chooses option B. The car dealership invests the money Bryan [4 marks]
pays as soon as they receive it.
If they invest it in an account paying 0.4 % interest per month and inflation is 0.1
% per month, calculate the real amount of money the car dealership has received
by the end of the 6 year period.

Give your answers to this question correct to two decimal places.

Gen invests $2400 in a savings account that pays interest at a rate of 4% per
year, compounded annually. She leaves the money in her account for 10 years,
and she does not invest or withdraw any money during this time.

3a. Calculate the value of her savings after 10 years. [2 marks]

3b. The rate of inflation during this 10 year period is 1.5% per year. [3 marks]
Calculate the real value of her savings after 10 years.

Siân invests 50 000 Australian dollars (AUD) into a savings account which pays a
nominal annual interest rate of 5.6 % compounded monthly.

4a. Calculate the value of Siân’s investment after four years. Give your [3 marks]
answer correct to two decimal places.

4b. After the four-year period, Siân withdraws 40 000 AUD from her savings [3 marks]
account and uses this money to buy a car. It is known that the car will
depreciate at a rate of 18 % per year.
The value of the car will be 2500 AUD after t years.
Find the value of t.

N Z Q R
 The following table shows four different sets of numbers: N, Z, Q and R.

5a. Complete the second column of the table by giving one example of a [4 marks]
number from each set.

5b. Josh states: “Every integer is a natural number”. [2 marks]

Write down whether Josh’s statement is correct. Justify your answer.

Give your answers to parts (b), (c) and (d) to the nearest whole number.
Harinder has 14 000 US Dollars (USD) to invest for a period of five years. He has
two options of how to invest the money.
Option A: Invest the full amount, in USD, in a fixed deposit account in an
American bank.
The account pays a nominal annual interest rate of r % , compounded yearly, for
the five years. The bank manager says that this will give Harinder a return of
17 500 USD.

6a. Calculate the value of r. [3 marks]

Option B: Invest the full amount, in Indian Rupees (INR), in a fixed deposit
account in an Indian bank. The money must be converted from USD to INR before
it is invested.
The exchange rate is 1 USD = 66.91 INR.

6b. Calculate 14 000 USD in INR. [2 marks]

The account in the Indian bank pays a nominal annual interest rate of 5.2 %
compounded monthly.

6c. Calculate the amount of this investment, in INR, in this account after five [3 marks]
years.
6d. Harinder chose option B. At the end of five years, Harinder converted [3 marks]
this investment back to USD. The exchange rate, at that time, was 1 USD
= 67.16 INR.
Calculate how much more money, in USD, Harinder earned by choosing option B
instead of option A.

Phil takes out a bank loan of $150 000 to buy a house, at an annual interest rate
of 3.5%. The interest is calculated at the end of each year and added to the
amount outstanding.

7a. Find the amount Phil would owe the bank after 20 years. Give your [3 marks]
answer to the nearest dollar.

To pay off the loan, Phil makes annual deposits of $P at the end of every year in a
savings account, paying an annual interest rate of 2% . He makes his first deposit
at the end of the first year after taking out the loan.

7b. (1.0220−1)P [3 marks]

Show that the total value of Phil’s savings after 20 years is .
(1.02−1)

7c. Given that Phil’s aim is to own the house after 20 years, find the value [3 marks]
for P to the nearest dollar.

David visits a different bank and makes a single deposit of $Q , the annual interest
rate being 2.8%.

7d. David wishes to withdraw $5000 at the end of each year for a period of n[3 marks]
years. Show that an expression for the minimum value of Q is
5000 5000 5000
1.028
+ +…+ .
1.0282 1.028n

7e. Hence or otherwise, find the minimum value of Q that would permit [3 marks]
David to withdraw annual amounts of $5000 indefinitely. Give your answer to the
nearest dollar.

8a. In this question give all answers correct to two decimal places. [3 marks]
Diogo deposited 8000 Argentine pesos, ARS, in a bank account which pays a
nominal annual interest rate of 15% , compounded monthly.
Find how much interest Diogo has earned after 2 years.

ARS
 8b. Carmen also deposited ARS in a bank account. Her account pays a [3 marks]
nominal annual interest rate of 17% , compounded yearly. After three years, the
total amount in Carmen’s account is 10 000 ARS.
Find the amount that Carmen deposited in the bank account.

Mandzur, a farmer, takes out a loan to buy a buffalo. He borrows 900 000
Cambodian riels (KHR) for 2 years. The nominal annual interest rate is 15%,
compounded monthly.

9a. Find the amount of the interest that Mandzur must pay. Give your [4 marks]
answer correct to the nearest 100 KHR.

9b. Write down your answer to part (a) in the form [2 marks]
a × 10k , where 1 ⩽ a < 10, k ∈ Z.

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