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FINANCE AND GROWTH

GRADE 12
WORKSHEET
ACTIVITIES

EMAILBY
ADDRESS: melulekishabalala@gmail.com
MR M. SHABALALA CELLPHONE NUMBER: 0733318802
@NOMBUSO HIGH Page 1
 FINANCE AND
GROWTH
GRADE 12

CONCEPTS TO BE COVERED

1. SIMPLE AND COMPOUND INTEREST

2. GR11 COMPOUNDING PERIODS

3. GR11 GROWTH (APPRECIATION) AND DECAY

(DEPRECIATION)
4. TIME LINE
5. GR11 NOMINAL AND EFFECTIVE INTEREST RATES

6. NEW ANNUITIES( FUTURE VALUE AND PRESENT

VALUE(LOAN))
7. NEW SINKING FUND = APPRECIATION – DEPRECIATION

8. NEW COMPARISON OF BEST LOAN AND INVESTMENT

OPTIONS.

BY MR M. SHABALALA @NOMBUSO HIGH Page 2

 FINANCIAL MATHEMATICS
GRADE 11 SUMMARY NOTES
1. SIMPLE AND COMPOUND INTEREST
 CALCULATE A, P AND I
SIMPLE INTEREST – It is where by the interest is calculated on the total amount
invested or borrowed, and is not added onto the principal amount. Interest does not generate
another interest.
M ing L i t
A Futuve value/ accumulated amount/ final amount
P Principal amount/ initial amount/ starting amount
i Interest rate (written as decimal i g)
Period (usually years)
COMPOUND INTEREST- Allow interest to be earned on interest. Compound
interest is advantageous for investing money but not for taking out a loan.
M ing L it
NB! In Compound interest calculation now calculate use log in grade 12

2. COMPOUNDING PERIODS
 In grade 10 we only calculated amount invested where interest earned once a year. NOW
it is possible to earn interest anytime so if interest is not earned once a year, in Formula
we need to adjust i and to match with given compounding period

NB! Semi-annually/ halfyearly, monthly, and quarterly must be known for exam

BY MR M. SHABALALA @NOMBUSO HIGH Page 3

 3. GROWTH AND DECAY
 Once you bought expensive items they will lose value over a period of
time. E.g car or furniture loses its value as it becomes a scrap over a period
of time as it being used. In maths we called this is DEPRECIATION
 Other items gain value over a period of time.
E.g Property (house), house itself gain value as the home owner performs
exterior and interior renovations that add to the price tag of the house. In
maths we called this is APPRECIATION
 That is why people are encouraged to invest on property rather than spend
their money on buying expensive cars that will lose value over a period of
time.
APPRECIATION(L)
• M ing L it COMPOUND APPRECIATION
• AM i g L i SIMPLE APPRECIATION

DEPRECIATION( t
• M ing it COMPOUND DEPRECIATION

• AM i g i SIMPLE DEPRECIATION

NB! 2 methods that might be asked

 Straight line method use simple interest
 Reducing balance method use compound interest formula

NB!!!!FOR GRADE 12
 SINKING FUNDM Appreciation Depreciation
 SINKING FUND It is a saving account which is set up in order to save money to replace an
old item in future. It is used as a saving account that will enable investors to purchase/buy
expensive items of to find expensive capital outlays in few year’s time
 Calculate the REPLACEMENT/ EXPECTED/ NEW COST(APPRECIATION)
 Calculate the SCRAP/ BOOK/ TRADE-IN/ DECAY VALUES(DEPRECIATION)

BY MR M. SHABALALA @NOMBUSO HIGH Page 4

EXAMPLE 1
Determine the value R100 will grow to in 5 years, if interest is calculated at 12%
per annum compounded.
a) Monthly b) Quarterly c) Semi-annual/ halfyearly d) Daily

EXAMPLE 2
Khwezi invests 5 000 into an account that offers an interest rate of 27% p.a
compounded monthly. How much will Khwezi have after 9 months.
EXAMPLE 3
Which one is the better investment over a year or longer. 10,5% p.a compounded
daily and 10.55% p.a compounded monthly?
EXAMPLE 4
Mlando invest R6000 into an account which offers an interest rate of 11% p.a
compounded semi – annually. How much will he have after 3,5 years?
EXAMPLE 5
If Yanelisa’s salary is R25 000 per month and has increased at the same rate as
inflation since she started working 20 years ago, Calculate.
a) Her salary when when she started working, if the average rate of inflation over
the last twenty years has been 8,5% per annum.
EXAMPLE 6
The volume of water in a steam iron decreases by 18,5% per minute that it is in use.
If the iron has been used for 6 minutes and there is 29,31 ml of water remaining in
the iron, determine ,correct to the nearest millilitre, how many millilitres of water
the iron initially had by using reducing balance method?
4. TIME LINE
 Where there are changes in amount while invested.
 Calculations of more than one interests, deposits and withdrawals.
 Meaning that once there are more than one interest rates or deposits or withdrawals, we can
not use SIMPLE/COMPOUND interest directly. We use time line.
 Additional (deposit)- positive sign must be used
 Withdrawal – negative sign must be used
(Take note that: treat each amount separately and let
it grow it up to the last period)
EXAMPLE 1(deposit or withdraw)
Mrs Mkhize deposits R12 000 into a savings account. Two years later she adds an additional
R6 000 to her savings. How much will she have after 5 years if she receives an interest rate of
7,5% per annum compounded monthly?

BY MR M. SHABALALA @NOMBUSO HIGH Page 5

EXAMPLE 2(deposit or withdraw)
Amanda deposits R7 000 into a savings account which offers an interest rate of 8% p.a.
compounded quarterly. 3 years later she withdraws R2 000. How much will she have in her
account at the end of 8 years?
EXAMPLE 3(deposit or withdraw)
Mrs Zuma deposits R1 500 into a savings account which offers an interest rate of 11% p.a
compounded monthly. 2 years later she deposits R5 500 into the account and withdraws R1 000
one year later. Determine the amount that Mrs Zuma will have in her account after 7 years.
EXAMPLE 4(change in interest rate)
At the beginning of 2007, Johannes deposited R9 000 into a Money Market Investment account at an
interest rate of 12% compounded semi - annually. At the beginning of 2010 the interest rate dropped to
5,5% p.a compounded monthly. How much will Johannes have in his account at the beginning of 2012?
EXAMPLE 5(mixed changes)
R 2000 is invested into an account which offers an interest rate of 8% p.a compounded quarterly. 2 years
later an additional R1 000 was deposit into the account. 4 years after the initial investment, the interest rate
increased to 10,5% p.a compounded monthly. How much will be in the account after 8 years.
EXAMPLE 6(mixed changes)
R 5000 is invested into an account which offers an interest rate of 13% p.a compounded monthly.
3 years later an additional R2 000 is deposited into the account. 2 years after that R3000 is
withdrawn. 4 years after the initial investment the interest rate decreases to 10% p.a compounded
quarterly. How much will be in the account after 7 years
EXAMPLE 7
Mrs Ramaphosa invests R160 000 in the money market for 15 years. The interest is
compounded annually. The interest rate paid during the first 5 years is 10,5% p.a compounded
quartely.,9% p.a compounded monthly. for the next 7 years and 12,8% p.a compounded monthly.
for the last 3 years.
EXAMPLE 8
R7000 is deposited into a savings account, and four years later another R5000 was deposited to
the savings. Calculate the value of the savings at the end of seven years if the interest rate is 12%
compounded monthly. for the first three years, then increased to 13,5% pa. for the remaining
period.

EXAMPLE 9
Thobeka invested x Rand into an account offering an interest rate of 12 p.a compounded monthly.
3 years later she deposited 2x Rands into the account. After 7 years there is R27 655.87 in the
account. Determine the value of x.

EXAMPLE 10
R75 000 is invested in an account which offers interest rate at 11% p.a compounded monthly for
the first 24 months. Then the interest rate changes to 7,7% p.a compounded half – yearly.
If R9 000 is withdrawn from the account after one year and then a deposit of R3 000 is made
three years after the initial investment, how much will be in the account at the end of 6 years?

BY MR M. SHABALALA @NOMBUSO HIGH Page 6

 5. NOMINAL INTEREST RATE AND
EFFECTIVE INTEREST RATE
Effective interest rate- where the stated period and compounding
period are the same. It is where the compounding period is taken into consideration.

Nominal interest rate - where the stated period and compounding period
are not the same. The interest rate that is quoted in the question.

i ि i h i ि
gLi uu M gL gL M gL

i uu effective interest rate

i ि Nominal interest rate
number of times interest receive a year (compounding period)
number of times interest receive a year (compounding period)

 In GRADE 12 you have to know how to convert NOMINAL INTEREST

RATE to EFFECTIVE INTEREST RATE vise versa. Finally know how
to CONVERT FROM ONE COMPOUNDING PERIOD TO ANOTHER

BY MR M. SHABALALA @NOMBUSO HIGH Page 7

GR 12 START UP ACTIVITIES FINANCIAL MATHS
EXAMPLE 1
Enzokuhle’s car which was bought 5 years ago is now worth R80 434,88. What was the original
purchase price of the car if it depreciated at 8% p.a compounded quarlerly?
EXAMPLE 2
Mnqobi invested R5 000 into a fund paying interest(i) compounded monthly. After 26 months the
value of the fund was 5 942,89. Determine the value of i, the interest rate correct to one decimal
place.
EXAMPLE 3*
Solve for : t th t M ֠hh
EXAMPLE 4*
An investment of R25 000 grows to an amount of R55 267,04. If the account offers an interest
rate of 12% per annum compounded annually, for how long was the money invested?
EXAMPLE 5*
Calculate how many years it will take for an investment, earning 7,5% p.a compounded
monthly to be triple in value.
EXAMPLE 6*
How long must any amount of money be invested for , in order it to double at an interest rate of
8,5% p.a compound interest. Give your answers in years and months.
EXAMPLE 7*
A motor cycle which costs R250 000 depreciates at a rate of 3,8% per annum compounded
monthly. How long will it take for the motor cycle to be worth R206677,47? Give your answer to
the nearest year.
EXAMPLE 8(TIME LINE)
R60 000 is invested in a account which offers interest at 7% p.a compounded quarterly for the
first 18 months. There after interest rate changes to 5% p.a compounded monthly. Three years
after the initial investment, R5000 is withdrawn from the account. How much will be in the
account at the end of 5 years?
EXAMPLE 9(TIME LINE)
R150 000 is deposited in an investment account for a period of 6 years at an interest rate of 12%
p.a compounded half-yearly for the first 4 years and then 8.5% p.a compounded yearly for the
rest of the period. A deposit of R8 000 is made into the account after the first year and then
another deposit of R2000 is made 5 years later after the initial investment. Calculate the value of
the investment at the end of the 6 year period.
EXAMPLE 10( NOMINAL AND EFFECTIVE INTEREST RATE)
Calculate the effective interest rate equivalent to a nominal interest rate of 8,25% p.a. calculated quarterly.
EXAMPLE 11(NOMINAL AND EFFECTIVE INTEREST RATE)
Convert an interest rate of 15% p.a compounded monthly to an effective interest rate
EXAMPLE 12(NOMINAL AND EFFECTIVE INTEREST RATE)
Convert an effective rate of 8,5% p.a. to a nominal annual interest rate compounded
a) Monthly
b) Semi – annually or half yearly
EXAMPLE 13(NOMINAL AND EFFECTIVE INTEREST RATE)*
Convert an interest rate of 12% compounded monthly to an interest compounded quarterly

BY MR M. SHABALALA @NOMBUSO HIGH Page 8

 7. NEW GR12 FINANCIAL MATHEMATICS

1. INVESTMENT/FV 2. LOAN TO BE PAID

A)SINKING FUND B) ANNUITIES A) ANNUITIES

 Appreciation – gain value
M n L t FUTURE VALUE PRESENT VALUE
 Depreciation – loose value  Money borrowed to be
 Money invested on
M n t
monthly bases to be paid back on monthly
 MinMii ᥩiᇖ M
used in future. bases e.g LoantNSFASt
Appreciation  Get money first and pay
 Gain profit
depreciation L interest.
 eireci i irn t  FV M L
in sinking fund use  PV M
 Calculation of i won' t
FV formula. be asked in annuities.  Calculation of i won' t
be asked in annuities.
 Outstanding balance

NB! When you calculate n use log.

COMPARE BEST INVESTMENTS

AND LOAN OPTIONS
 Best investment option - Whereby there is more interest earned.

 Best Loan option - Whereby there is less interest paid.

BY MR M. SHABALALA @NOMBUSO HIGH Page 9

 1. FUTURE VALUE ANNUITY

 Future value - is used in investments when you save money for future.
E.g. Saving account, Retirement fund and Sinking fund.
 Regular payment (usually monthly payments) - it is like a present value that will collect
interest over a period of time.

L
FV M
Where F Future Value
Value of monthly instalment
i Interest rate
Number of payments

HINTS ON FUTURE VALUE CALCULATIONS

 Calculate F, and Straight forward.Won' t be asked to calculate i
 FUTURE VALUE - (There are 3 cases when calculating fv)

3 cases
. Payment made in one month’s time 颸 uि ࢓ 颸 i i颸

. Payment starting at the end of first month 颸 uि ࢓ 颸 i i颸.

֠. Payment start immediately and end on the last day ninclude nL in the
L
formulat FV M
 Since we have immediately and end at the same time it means one of
the months it was repeatedt meaning that payments were made
twice. That is why we have L for that additional payment made.

BY MR M. SHABALALA @NOMBUSO HIGH Page 10

 2. PRESENT VALUE ANNUITY
 Present value - used for loans e.g. Student loan (NSFAS), Vehicle loan to buy cars,
loan to buy house (Bond or Mortgage or Home loan).
 Present value - Used when paying back the loan and interest is charged.
 First money received and paid later.
 Present value (P) - it is always the outstanding balance with n payments to go.

L
PM
Where P Present Value
Value of monthly instalment
i Interest rate
Number of payments left / to be made

HINTS ON PRESENT VALUE CALCULATIONS

1. Calculate P, and i i gt Straight forward. Won' t be asked to calculate i
2. Calculate OUTSTANDING BALANCE →t ि࢖ iि 颸
Option 1→Use present value formula but in n→ substitute number of
payments left/ still to go.
Option 2→ Use future value formula but n→ number of payments which have
been made.

Outstanding balance M n L t
L
where P→uि ࢓ि

2. Difficulties to pay e.g 103rd ,104th , 105th payments missed ,generate profit outside M n L t
n = 3 since 3 payments missed. 1st calculate outstanding balance for 102nd payment made
3. FINAL PAYMENT→( ि ि ࢓ ࢓ hi ࢚ि ि 颸 ࢚i ࢓ )
→ 1st find outstanding balance
→ 2nd use n L t
Where P→ि 颸 ࢚i ࢓
n =1 (since final payment will be made 1 month later)
4. TOTAL INTEREST PAID = Monthly payment×(n×compounding period) - loan amount

EXAMPLES, Past exam papers,Sept 2016, Nov 2016, feb/march 2011,Sept 2019

BY MR M. SHABALALA @NOMBUSO HIGH Page 11

ACTIVITY 1 (FUTURE VALUE)
1. Enzokuhle decided to start saving money for a period of 8 years starting on 31st
December 2009. At the end of January 2010 (in one month's time), he deposited R2 300
into the savings plan. Thereafter, he continued making deposits of R2300 at the end of
each month for the planned 8 year period. The interest rate remained fixed at 10% per
annum compounded monthly. How much will he have saved at the end of his 8 year plan
which started on the 31st December 2009?
2. Lusanda starts to save for his retirement. He opens an investment account and
immediately deposits R800 into account, which earns 12.5% p.a compounded monthly.
Thereafter, he deposits R800 at the end of each month for 20 years. What is the value of
his retirement savings at the end of 20 years period?
3. On her 25th birthday, Zoleka decided to accumulate R5 000 000 by her 50th birthday.
She plans to make equal monthly payments into account that pays 10% interest p.a
compounded monthly. If Zoleka makes her first payment a month after her 25th birthday
and her last payment on her 50th birthday, determine how much she will need to deposit
monthly to accumulate R5000 000 on her 50th birthday.
4. Ayanda’s birthday is on the 1st of January. On the day he turns 20 he starts to save for his
21st birthday party by placing R200 into a savings account every month with his last
payement being made on his 21st birthday. How much will Ayanda have for his party, if
the account promises an interest rate of 4,5% p.a compounded monthly?

ACTIVITY 2 (PRESENT VALUE)

1. Yandiswa takes a loan from a bank to start his own business. His monthly repayments are
R30 428 a month for 15 years. The interest rate is 9% compounded monthly.

1.1 Determine how much Yandiswa initially borrowed from the bank.
1.2 Determine the balance of the loan at the end of 5 years.

2. Michael Borrows R5000 from a MMS lender at an interest rate of 28% p.a compounded
monthly. He repays the loan by means of equal monthly payments of R800 and a final
payment of less than R800.

2.1 Determine the number of payments at R800?

2.2 What will be the value of final payment be?

3. Siphokazi bought a house. She paid a deposit of R102 000, which is equivalent to 12% of
the selling price of the house. She obtained a loan from the bank to pay the balance of the
selling price. The bank charges her interest of 9% per annum, compounded monthly.

3.1 Determine the selling price of the house.

3.2 The period of the loan is 20 years and she starts repaying the loan one month after it
was granted calculate her monthly instalments.
3.3 How much interest will she pay over the period of 20 years? Round your answer
correct to the nearest rand.
3.4 Calculate the outstanding balance of her loan immediately after her 85th instalment.

BY MR M. SHABALALA @NOMBUSO HIGH Page 12

 3. SINKING FUND

 SINKING FUND- It is a saving account which is set up in order to save money to replace an
old item in future. It is used as a saving account that will allow investor to purchase/buy
expensive items or to fund expensive capital outlays in few years time
 Calculate the REPLACEMENT/EXPECTED/NEW COST →(APPRECIATION)
 Calculate the SCRAP VALUE/BOOK/TRADE-IN/DECAY VALUE →(DEPRECIATION)

SINKING FUND = APPRECIATION - DEPRECIATION

 To calculate monthly instalment in the sinking fund →Use the future value annuity formula

ACTIVITY 1 (SINKING FUND)

1. A company purchases a new vehicle for R200 000. The vehicle is expected to depreciate at a
rate of 24% per annum on a reducing balance. It is also expected that the vehicle will have to
be replaced after 5 years. A sinking fund is set up for this purpose. If the replacement cost of
the vehicle increases by 18% per annum compounded annually calculate

1.1 The value of the current vehicle in 5 years time.

1.2 The cost of the new vehicle in 5 years time
1.3 The total required value of the sinking fund, if the old vehicle is sold and proceeds
contribute towards the purchase of the new vehicle.
1.4 The monthly instalments paid into the sinking fund If the interest rate is 15% compounded
monthly and start when the vehicle is initially purchased

2. A company purchased a photocopying machine for R270 000. The company expects to replace
the machine in 5 years time. They anticipated the cost of the machine to escalate at 16% p.a
compound interest.They expect their present machine to have a scrap value of R100 000 in 5
years time when they sell it.The company set up a sinking fund to save for a new
photocopying machine. They will use the amount they obtain from the scrap value of the old
machine and the money in the sinking fund after 5 years, to purchase a new machine. The
company will pay a fixed monthly amount into the sinking fund, starting in one month’s time
and will make the final payment at the end of the 5 year period. The interest earned on the
sinking fund is 10% p.a compounded monthly.

2.1 Determine the cost of the new machine in 5 years time

2.2 Calculate the rate of depreciation of the old machine on the reducing balance method.
2.3 Determine the value of the fixed monthly payments the company must pay into the sinking
fund

BY MR M. SHABALALA @NOMBUSO HIGH Page 13

 4. COMPARE BEST INVESTMENT
AND LOAN OPTIONS
 INVESTMENT
Higher the interest rate always offer the greatest return provided that
there are more compounding period OR other factors are considered
 LOAN
Lower the interest rate always offer the lowest total payment provided
that there are more compounding period or other factors are
considered.

ACTIVITY 1 (COMPARE INVESTMENTS AND LOAN)

1. You decide to take out a bank loan of R800 000. Repayments are made on a monthly
basis starting one month after the granting of the loan. You are offered three loan options:

Option A
Pay off the loan over twenty years at 18% per annum compounded monthly.

Option B
Pay off the loan over thirty years at 18% per annum compounded monthly.

Option C
Pay off the loan over thirty years at 15% per annum compounded monthly.
(a) Calculate the monthly amount payable for each option.
(b) Which option would be the best financially for you? Motivate your answer by using
appropriate calculations….MIND ACTION

2. Two friends, Kuda and Thabo, each want to invest R5 000 for four years. Kuda invests
his money in an account that pays simple interest at 8,3% per annum. At the end of four
years, he will receive a bonus of exactly 4% of the accumulated amount. Thabo invests
his money in an account that pays interest at 8,1% p.a., compounded monthly

Whose investment will yield a better return at the end of four years? Justify
your answer with appropriate calculations.

BY MR M. SHABALALA @NOMBUSO HIGH Page 14

 FINANCE AND
GROWTH

GRADE 12
PAST EXAM
PAPERS
EMAIL
BYADDRESS: melulekishabalala@gmail.com
MR M. SHABALALA CELLPHONE NUMBER: 0733318802
@NOMBUSO HIGH Page 15
QUESTION 1 (NOVEMBER 2008)
1.1 R1 570 is invested at 12% p.a. compound interest. After how many years will

the investment be worth R23 000? (4)

1.2 A farmer has just bought a new tractor for R800 000. He has decided to replace

the tractor in 5 years' time, when its trade-in value will be R200 000. The

replacement cost of the tractor is expected to increase by 8% per annum.

1.2.1 The farmer wants to replace his present tractor with a new one in 5 years'

time. The farmer wants to pay cash for the new tractor, after trading in his

present tractor for R200 000. How much will he need to pay? (3)

1.2.2 • One month after purchasing his present tractor, the farmer deposited

rands into an account that pays interest at a rate of 12% p.a.,

compounded monthly.

• He continued to deposit the same amount at the end of each month

for a total of 60 months.

• At the end of 60 months he has exactly the amount that is needed to

purchase a new tractor, after he trades in his present tractor.

Calculate the value of . (6)

1.2.3 Suppose that 12 months after the purchase of the present tractor and

every 12 months thereafter, he withdraws R5 000 from his account, to

pay for maintenance of the tractor. If he makes 5 such withdrawals, what

will the new monthly deposit be? (4)

[17]

BY MR M. SHABALALA @NOMBUSO HIGH Page 16

QUESTION 2 (NOVEMBER 2009)
2.1 A photocopier valued at R24 000 depreciates at a rate of 18% p.a. on the

reducing- balance method. After how many years will its value be R15 000? (4)

2.2 A car that costs R130 000 is advertised in the following way: 'No deposit

necessary and first payment due three months after date of purchase.' The

interest rate quoted is 18% p.a. compounded monthly.

2.2.1 Calculate the amount owing two months after the purchase date, which

is one month before the first monthly payment is due. (3)

2.2.2 Herschel bought this car on 1 March 2009 and made his first payment

on 1 June 2009. Thereafter he made another 53 equal payments on the

first day of each month.

(a) Calculate his monthly repayments. (3)

(b) Calculate the total of all Herschel's repayments. (1)

2.2.3 Hashim also bought a car for R130 000. Healso took out a loan for

R130 000, at an interest rate of 18% p.a. compounded monthly. He also

made 54 equal payments. However, he started payments one month after

the purchase of the car. Calculate the total of all Hashim's repayments. (4)

2.2.4 Calculate the difference between Herschel's and Hashim's total

repayments. (1)

[16]

BY MR M. SHABALALA @NOMBUSO HIGH Page 17

QUESTION 3 (FEB/MARCH 2010)
3.1 Andrew wants to borrow money to buy a motorbike that costs R55 000,00 and

plans to repay the full amount over a period of 4 years in monthly instalments.

He is presented with TWO options:

Option 1: The bank calculates what Andrew would owe if he borrows R55 000,00
for 4 years at a simple interest rate of 12,75% p.a., and then pays that
amount back in equal monthly instalments over 4 years.
Option 2: He borrows R55 000,00 from the bank. He pays the bank back in
equal instalments over 4 years, the first payment being made at the
end of the first month. Compound interest at 20% p.a. is charged on
the reducing balance.
3.1.1 If Andrew chooses Option 1, what will his monthly instalment be? (4)
3.1.2 Which option is the better option for Andrew? Justify your answer with
appropriate calculations. (4)
3.1.3 What interest rate should replace 12,75% p.a. in Option 1 so that there is
no difference between the two options? (3)

3.2 Lindiwe receives a bursary of R80 000,00 for her studies at university. She

invests the money at a rate of 13,75% p.a.,compounded yearly. She decides to

withdraw R25 000,00 at the end of each year for her studies, starting at the end
of the first year.

Determine for how many full years will this investment finance her studies. (4)

3.3 Given: M n L t where P and are positive constants

3.3.1 State whether the graph of A, as a function of , is linear, quadratic,

exponential or none of these. (1)
3.3.2 Draw a possible graph of A, as a function of . (2)
3.3.3 If increases by 1, then determine the increase in . (1)
[19]

BY MR M. SHABALALA @NOMBUSO HIGH Page 18

QUESTION 4 (NOVEMBER 2010)
4.1 At what annual percentage interest rate, compounded quarterly, should a lump
sum be invested in order for it to double in 6 years? (5)
4.2 Timothy buys furniture to the value of R10 000. He borrows the money on
1 February 2010 from a financial institution that charges interest at a rate of
9,5% p.a. compounded monthly. Timothy agrees to pay monthly instalments
of R450. The agreement of the loan allows Timothy to start paying these equal
monthly instalments from 1 August 2010.
4.2.1 Calculate the total amount owing to the financial institution on
1 July 2010. (2)
4.2.2 How many months will it take Timothy to pay back the loan? (4)
4.2.3 What is the balance of the loan immediately after Timothy has made the
25th payment? (3)
[14]
QUESTION 5 (FEB/MARCH 2011)
5.1 R1 430,77 was invested in a fund paying p.a. compounded monthly.

After 18 months the fund had a value of R1 711,41. Calculate . (4)

5.2 A father decided to buy a house for his family for R800 000. He agreed to pay

monthly instalments of R10 000 on a loan which incurred interest at a rate of

14%p.a. compounded monthly. The first payment was made at the end of the

first month.

5.2.1 Show that the loan would be paid off in 234 months. (4)

5.2.2 Suppose the father encountered unexpected expenses and was unable to

pay any instalments at the end of the 120th , 121st , 122nd and 123rd

months. At the end of the 124th month he increased his payment so as

to still pay off the loan in 234 months by 111 equal monthly payments.

Calculate the value of this new instalment. (7)

[15]

BY MR M. SHABALALA @NOMBUSO HIGH Page 19

QUESTION 6 (NOVEMBER 2011)
6.1 How many years will it take for an article to depreciate to half its value according
to the reducing-balance method at 7% per annum? (4)
6.2 Two friends each receive an amount of R6 000 to invest for a period of 5 years.
They invest the money as follows:
 Radesh: 8,5% per annum simple interest. At the end of the 5 years, Radesh
will receive a bonus of exactly 5% of the principal amount.
 Thandi: 8% per annum compounded quarterly.
Who will have the bigger investment after 5 years? Justify your answer with
appropriate calculations. (6)
6.3 Nicky opened a savings account with a single deposit of R1 000 on 1 April 2011.
She then makes 18 monthly deposits of R700 at the end of every month. Her first
Payment is made on 30 April 2011 and her last payment on 30 September 2012.
The account earns interest at 15% per annum compounded monthly.

Determine the amount that should be in her savings account immediately after
her last deposit is made (that is on 30 September 2012). (6)
[16]
QUESTION 7 (FEB/MARCH 2012)
7.1 Lerato wants to purchase a house that costs R850 000. She is required to pay
a 12% deposit and she will borrow the balance from a bank. Calculate the
amount that Lerato must borrow from the bank. (2)

7.2 The bank charges interest at 9% per annum, compounded monthly on the loan

amount. Lerato works out that the loan will carry an effective interest rate of
9,6% per annum. Is her calculation correct or not? Justify your answer with
appropriate calculations. (4)

7.3 Lerato takes out a loan from the bank for the balance of the purchase price and

agrees to pay it back over 20 years. Her repayments start one month after her
loan is granted. Determine her monthly instalment if interest is charged at 9%
per annum compounded monthly. (4)

7.4 Lerato can afford to repay R7 000 per month. How long will it take her to repay

the loan amount if she chooses to pay R7 000 as a repayment every month? (4)
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BY MR M. SHABALALA @NOMBUSO HIGH Page 20

QUESTION 8 (NOVEMBER 2012)
8.1 A business buys a machine that costs R120 000. The value of the machine
depreciates at 9% per annum according to the diminishing-balance method.
8.1.1 Determine the scrap value of the machine at the end of 5 years. (3)
8.1.2 After five years the machine needs to be replaced. During this time,
inflation remained constant at 7% per annum. Determine the cost of the
new machine at the end of 5 years. (3)
8.1.3 The business estimates that it will need R90 000 by the end of five years.
A sinking fund for R90 000, into which equal monthly instalments must
be paid, is set up. Interest on this fund is 8,5% per annum, compounded
monthly. The first payment will be made immediately and the last
payment will be made at the end of the 5-year period.
Calculate the value of the monthly payment into the sinking fund. (5)
8.2 Lorraine receives an amount of R900 000 upon her retirement. She invests this
amount immediately at an interest rate of 10,5% per annum, compounded monthly.

She needs an amount of R18 000 per month to maintain her current lifestyle. She
plans to withdraw the first amount at the end of the first month.

For how many months will she be able to live from her investment? (6)
[17]
QUESTION 9 (FEB/MARCH 2013)
9.1 Raeesa invests R4 million into an account earning interest of 6% per annum,
compounded annually. How much will her investment be worth at the end of
3 years? (3)
9.2 Joanne invests R4 million into an account earning interest of 6% per annum,
compounded monthly.
9.2.1 She withdraws an allowance of R30 000 per month. The first withdrawal
is exactly one month after she has deposited the R4 million. How many
such withdrawals will Joanne be able to make? (6)
9.2.2 If Joanne withdraws R20 000 per month, how many withdrawals will she
be able to make? (3)
[12]
QUESTION 10 (FEB/MARCH 2013)
Jeffrey invests R700 per month into an account earning interest at a rate of 8% per
annum, compounded monthly. His friend also invests R700 per month and earns interest
compounded semi-annually (that is every six months) at per annum. Jeffrey and his
friend's investments are worth the same at the end of 12 months. Calculate .
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BY MR M. SHABALALA @NOMBUSO HIGH Page 21

QUESTION 11 (NOVEMBER 2013)
11.1 Mpho invests R12 500 for exactly years. She earns interest at a rate of 9% per
annum, compounded quarterly. At the end of years, her investment is worth
R30 440

11.1.1 Calculate the effective annual interest rate of Mpho’s investment. (2)
11.1.2 Determine the value of . (5)

11.2 Darrel is planning to buy his first home. The bank will allow him to use a
maximum of 30% of his monthly salary to repay the bond.

11.2.1 Calculate the maximum amount that the bank will allow Darrel to spend
each month on his bond repayments, if Darrel earns R18 480 per month. (1)

11.2.2 Suppose, at the end of each month, Darrel repays the maximum amount
allowed by the bank. How much money does Darrel borrow if he takes
25 years to repay the loan at a rate of 8% p.a, compounded monthly?
(The first repayment is made one month after the loan is granted.) (4)
[12]
QUESTION 12 (FEB/MARCH 2014)
Susan buys a car for R350 000. She secures a loan at an interest rate of 7% p.a.,
compounded monthly. The monthly instalment is R6 300. She pays the first
instalment one month after the loan was secured.

12.1 Calculate the effective annual interest rate on the loan. Leave your answer
correct to TWO decimal places. (3)
12.2 How many months will it take to repay the loan? (5)
12.3 Calculate the value of the final instalment. (5)
12.4 The value of the car depreciates at % p.a. After 3 years its value is R252 000.
calculate . (3)
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BY MR M. SHABALALA @NOMBUSO HIGH Page 22

QUESTION 13 (NOVEMBER 2014)
13.1 Exactly five years ago Mpume bought a new car for R145 000. The current book
value of this car is R72 500. If the car depreciates by a fixed annual rate according
to the reducing – balance method, calculate the rate of depreciation. (3)

13.2 Samuel took out a home loan for R500 000 at an interest rate of 12% per annum,
compounded monthly. He plans to repay this loan over 20 years and his first
payment is made one month after the loan is granted.

13.2.1 Calculate the value of Samuel’s monthly instalment. (4)

13.2.2 Melissa took out a loan for the same amount and at the same interest rate
as Samuel. Melissa decided to pay R6 000 at the end of every month.
Calculate how many months it took for Melissa to settle the loan. (4)
13.2.3 Who pays more interest, Samuel or Melissa? Justify your answer. (2)
[13]
QUESTION 14 (FEB/MARCH 2015)
14.1 Nomsa started working on 1 January 1970. At the end of January 1970 and at
the end of each month thereafter, she deposited R400 into an annuity fund.
She continued doing this until she retired on 31 December 2013.

14.1.1 Determine the total amount of money that she paid into the fund. (2)
14.1.2 The interest rate on this fund was 8% p.a, compounded monthly.
Calculate the value of the fund at the time that she retired. (5)
14.1.3 On the 1 January 2014 Nomsa invested R2 million in an account paying
interest at 10% p.a compounded monthly. Nomsa withdraws a fixed
amount from this account at the end of each month, starting on
31 January 2014. If Nomsa wishes to make monthly withdrawals from
this account for 25 years, calculate the maximum amount she could
withdraw at the end of each month. (4)

14.2 For each of the three years from 2010 to 2012 the population of town X decreased
by 8% per year and the population of town Y increased by 12% per year.

At the end of 2012 the populations of these two towns were equal.

Determine the ratio of the population of town X (call it ) to the population of

town Y (call it ) at the beginning of 2010. (4)
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BY MR M. SHABALALA @NOMBUSO HIGH Page 23

QUESTION 15 (SEPTEMBER 2015)
15.1 How long will it take for a motor car to double in value if the annual inflation
rate is 8,5% ? (4)
15.2 A loan of R350 000, taken on 1 January 2005, is to be repaid in regular fixed
instalments at the end of each month. Interest was charged at 13,5% p.a
compounded monthly for 20 years. The client made the first payment on
31 March 2005.

15.2.1 Calculate the value of the loan payable on 28 February 2005. (2)
15.2.2 Determine the monthly repayment that will settle the loan within the
20 year period. (4)
15.2.3 The client wishes to settle the loan at the end of the 180th month.
Calculate the savings made as a result of settling this loan earlier. (5)
[15]
QUESTION 16 (FEB/MARCH 2016)
16.1 Diane invests a lump sum of R5 000 in a savings account for exactly 2 years.
The investment earns interest at 10% p.a compounded quarterly.

16.1.1 What is the quarterly interest rate for Diane’s investment? (1)
16.1.2 Calculate the amount in Diane’s savings account at the end of the 2 years. (3)

16.2 Motloi inherits R800 000. He invests all of his inheritance in a fund which earns
interest at a rate of 14% p.a, compounded monthly. At the end of each month he
withdraws R10 000 from the fund. His first withdrawal is exactly one month
after his initial investment.

16.2.1 How many withdrawals of R10 000 will Motloi be able to make from
this fund? (5)
16.2.2 Exactly four years after his initial investment Motloi decides to withdraw
all the remaining money in his account and to use it as a deposit towards
a haouse.

(a) What is the value of Motloi’s deposit, to the nearest rand? (4)
(b) Motloi’s deposit is exactly 30% of the purchase price of the house.
What is the purchase price of the house, to the nearest rand? (1)
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BY MR M. SHABALALA @NOMBUSO HIGH Page 24

QUESTION 17 (NOVEMBER 2015)
The graph of shows the book value of a vehicle years after the time Joe bought it.
The graph of shows the cost price of a similar new vehicle years later.

17.1 How much did Joe pay for the vehicle? (1)
17.2 Use the reducing – balance method to calculate the percentage annual rate of
depreciation of the vehicle that Joe bought. (4)
17.3 If the average rate of the price increase of the vehicle is 8,1% p.a , calculate the
value of (3)
17.4 A vehicle that costs R450 000 now, is to be replaced at the end of 4 years. The
old vehicle will be used as a trade-in. A sinking fund is created to cover the
replacement cost of this vehicle. Payments will be made at the end of each
month. The first payment will be made at the end of the 13th month and the
last payment will be made at the end of the 48th month. The sinking fund earns
interest at a rate of 6,2 % p.a , compounded monthly.

Calculate the monthly payment to the fund. (5)

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BY MR M. SHABALALA @NOMBUSO HIGH Page 25

QUESTION 18 (SEPTEMBER 2016)
18.1 If a car valued at R255 000 depreciates on a reducing balance method at an
interest rate of 12,5 % p.a., calculate the book value of the car after 7 years. (3)
18.2 A loan of R10 000, taken on 1 February 2016, is to be repaid in regular fixed
instalments of R450 on the first day of each month. Interest is charged on the
loan at 9,5 % p.a. compounded monthly. The first instalment is paid on
1 August 2016.

Calculate:
18.2.1 The total amount payable on 1 July 2016. (2)
18.2.2 The number of payments that will be needed to settle the loan. (5)
18.2.3 The balance outstanding on the loan after the 25th payment has been
made. (4)
[14]
QUESTION 19 (NOVEMBER 2016)
On 1 June 2016 a bank granted Thabiso a loan of R250 000 at an interest rate of 15% p.a
compounded monthly, to buy a car. Thabiso agreed to repay the loan in monthly
instalments commencing on 1 July 2016 and ending 4 years later on 1 June 2020.
However, Thabiso was unable to make the first two instalments and only commenced
with the monthly instalments on 1 September 2016.

19.1 Calculate the amount Thabiso owed the bank on 1 August 2016, a month

before he paid his first monthly instalment. (2)

19.2 Having paid the first monthly instalment on 1 September 2016, Thabiso will still

pay his last monthly instalment on 1 June 2020. Calculate his monthly instalment. (4)

19.3 If Thabiso paid R9 000 as his monthly instalment starting on 1 September 2016,

how many months sooner will he repay the loan? (5)

19.4 If Thabiso paid R9 000 as a monthly instalment starting on 1 September 2016,

calculate the final instalment to repay the loan. (4)

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BY MR M. SHABALALA @NOMBUSO HIGH Page 26

QUESTION 20 (FEB/MARCH 2017)
20.1 On the 2nd day of January 2015 a company bought a new printer for R150 000.
 The value of the printer decreases by 20% annually on the reducing-balance
method.
 When the book value of the printer is R49 152, the company will replace
the printer.
20.1.1 Calculate the book value of the printer on the 2nd day of January 2017. (3)
20.1.2 At the beginning of which year will the company have to replace the
printer? Show ALL calculations. (4)
20.1.3 The cost of a similar printer will be R280 000 at the beginning of 2020.04.07
The company will use the R49 152 that it will receive from the sale of the
old printer to cover some of the costs of replacing the printer. The company
set up a sinking fund to cover the balance. The fund pays interest at 8,5%
per annum, compounded quarterly. The first deposit was made on
2 April 2015 and every three months thereafter until 2 January 2020.
Calculate the amount that should be deposited every three months to have
enough money to replace the printer on 2 January 2020. (4)
20.2 Lerato wishes to apply for a home loan. The bank charges interest at 11% per
annum, compounded monthly. She can afford a monthly instalment of R9 000
and wants to repay the loan over a period of 15 years. She will make the first
monthly repayment one month after the loan is granted. Calculate, to the nearest
thousand rand, the maximum amount that Lerato can borrow from the bank. (5)
[16]
QUESTION 21 (NOVEMBER 2017)
21.1 Mbali invested R10 000 for 3 years at an interest rate of % p.a, compounded
monthly. At the end of this period, she received R12 146,72. Calculate ,
correct to ONE decimal place. (5)
21.2 Piet takes a loan from a bank to buy a car for R235 000. He agrees to repay the
loan over a period of 54 months. The first instalment will be paid one month
after the loan is granted. The bank charges interest at 11% p.a, compounded
monthly.
21.2.1 Calculate Piet’s monthly instalment. (4)
21.2.2 Calculate the total amount of interest that Piet will pay during the
first year of the repayment of the loan. (6)
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QUESTION 22 (FEB/MARCH 2018)
22.1 On 30 June 2013 and at the end of each month thereafter, Asif deposited R2 500
into a bank account that pays interest at 6% per annum, compounded monthly.
He wants to continue to deposit this until 31 May 2018.

Calculate how much money Asif will have in this account immediately after
depositing R2 500 on 31 May 2018 (3)
22.2 On 1 February 2018, Genevieve took a loan of R82 000 from the bank to pay for
her studies. She will make her first repayment of R3 200 on 1 February 2019 and
continue to make payments of R3 200 on the first of each month thereafter until
she settles the loan. The bank charges interest at 15% per annum, compounded
monthly.
22.2.1 Calculate how much Genevieve will owe the bank on 1 January 2019. (3)
22.2.2 How many instalments of R3 200 must she pay? (5)
22.2.3 Calculate the final payment, to the nearest rand, Genevieve has to pay
to settle the loan. (5)
[16]
QUESTION 23 (SEPTEMBER 2018)
23.1 A tractor costing R180 000 depreciates on the reducing balance method to

R65 000 at the end of 8 years. Determine the rate at which the tractor is

depreciating per annum. (3)

23.2 Tebogo buys a flat at the beach front for R850 000. She takes out a loan from the

bank at an interest rate of 14,25 % per annum compounded monthly. Her first

instalment will commence in one month after she has taken out the loan.

23.2.1 Calculate the monthly repayments over a period of 20 years. (4)

23.2.2 If the monthly repayment is increased by 20 % before the first payment is

being made towards the loan, determine the number of payments that will

now be made to settle the loan. (4)

23.2.3 Calculate the final payment to settle the loan in QUESTION 23.2.2. (4)

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QUESTION 24 (NOVEMBER 2018)
24.1 Selby decided today that he will save R15 000 per quarter over the next four years.
He will make the first deposit into a saving account in three months’ time and
he will make his last deposit at the end of four years from now.
24.1.1 How much will Selby have at the end of four years if interest is earned
at 8,8% per annum, compounded quarterly? (3)
24.1.2 If Selby decided to withdraw R100 000 from the account at the end of
three years from now, how much will he have in the account at the end
of four years from now? (3)
24.2 Tshepo takes out a home loan over 20 years to buy a house that costs R1 500 000.
24.2.1 Calculate the monthly instalment if interest is charged at 10,5% p.a,
compounded monthly. (4)
24.2.2 Calculate the outstanding balance immediately after the 144th payment
was made. (5)
[15]
QUESTION 25 (MAY/JUNE 2019)
25.1 Sandile bought a car for R180 000. The value of the car depreciated at 15% per
annum according to the reducing-balance method. The book value of Sandile’s
car is currently R79 866,96.

25.1.1 How many years ago did Sandile buy the car? (3)
25.1.2 At exactly the same time that Sandile bought the car, Anil deposited
R49 000 into a savings account at an interest rate of 10% p.a.,
compounded quarterly. Has Anil accumulated enough money in his
savings account to buy Sandile’s car now? (3)

25.2 Exactly 10 months ago, a bank granted Jane a loan of R800 000 at an interest
rate of 10,25% p.a., compounded monthly.
 Must be repaid over 20 years
 Must be repaid by means of monthly repayments of R7 853,15 starting one
month after the loan was granted.
25.2.1 How much did Jane owe immediately after making her 6th repayment? (4)
25.2.2 Due to financial difficulties, Jane missed the 7th ,8th and 9th payments
She was able to make payments from the end of the 10th month onwards.
Calculate Jane’s increased monthly payment in order to settle the loan
in the original 20 years. (5)

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QUESTION 26 (SEPTEMBER 2019)
26.1 A car depreciated at the rate of 13,5% p.a to R250 000 over 5 years according to
the reducing balance method. Determine the original price of the car, to the
nearest rand. (3)
26.2 Melissa takes a loan of R950 000 to buy a house. The interest is 14,25% p.a.
compounded monthly. His first instalment will commence one month after
taking out the loan.

26.2.1 Calculate the monthly repayments over a period of 20 years. (4)

26.2.2 Determine the balance on the loan after the 100th instalment. (4)
26.2.3 If Melissa failed to pay the 101st , 102nd , 103rd and 104th instalments,
calculate the value of the new instalment that will settle the loan in
the same time period. (4)
[15]
QUESTION 27 (NOVEMBER 2019)
27.1 Two friends, Kuda and Thabo, each want to invest R5 000 for four years. Kuda
invests his money in an account that pays simple interest at 8,3% per annum.
At the end of four years, he will receive a bonus of exactly 4% of the
accumulated amount. Thabo invests his money in an account that pays interest
at 8,1% p.a., compounded monthly

Whose investment will yield a better return at the end of four years? Justify
your answer with appropriate calculations. (5)

27.2 Nine years ago, a bank granted Mandy a home loan of R525 000. This loan was
to be repaid over 20 years at an interest rate of 10% p.a., compounded monthly.
Mandy’s monthly repayments commenced exactly one month after the loan was
granted.
27.2.1 Mandy decided to make monthly repayments of R6 000 instead of the
required R5 066,36. How many payments will she make to settle the
loan? (5)
27.2.2 After making monthly repayments of R6 000 for nine years, Mandy
required money to fund her daughter’s university fees. She approached
the bank for another loan. Instead, the bank advised Mandy that the extra
amount repaid every month could be regarded as an investment and that
she could withdraw this full amount to fund her daughter’s studies.
Calculate the maximum amount that Mandy may withdraw from the loan
account. (4)
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