Do Ya Know
The money that lenders CHARGE and the money that investments EARN is referred to as...
INTEREST
Calculate the simple interest charged on a 2 year loan of $400, with an interest rate of 3.5% p.a.
$28
Draw an example of a graph that represents a straight-line depreciation.
*picture*
An investment portfolio incurs interest at 10% p.a. If $1250 was invested for 7 years, how much would this investment be worth?
$2435.90
Why is depreciation an important topic for us to study?
Once we start buying valuable things (cars, houses, etc.) we will have to think about how depreciation will impact our lives after purchase. Is the purchase worth it or not?
What does Depreciation refer to?
The loss of value of an item over time.
What is the interest rate when a $5000 investment earns $750 in interest over 3 years?
5%
What is the salvage value of a $27,500 car after 8 years if it depreciates by $1,315 each year?
$16,980
Would it be better to have a loan from the bank with a higher or lower interest rate? Why?
Lower. Less interest will be charged and, therefore, the loan "costs less" than with a higher rate.
A new vehicle depreciates at an average of 11% p.a. If it is originally valued at $42,950, what is its value after 3 years?
$30,278.42
When an item increases in value over time, this is called...
APPRECIATION
You've invested $2500 in a savings account that earns 2.5% p.a. What is the amount in the savings account after 10 years?
$3125
A piece of jewelry was bought for $568 in the year 1960. If the value depreciates by an average of $8 a year, when should the jewelry have no remaining value?
2031
A car loan has an interest rate of 2.9% and is $35,613.41 after 6 years. How much was borrowed 6 years ago?
$30,000
Would it be better to have a higher or lower depreciation rate on an item you own?
Lower. The higher the rate, the faster the item loses value, so a lower depreciation rate is better.
I = Prt
is the formula for what kind of interest?
- total owed after 5 years is $13,800
- interest accrues at 3% p.a.
$12,000
Which line represents a straight-line depreciation with a HIGHER depreciation rate? *picture*
BLUE LINE
In 2022, a house is worth $1,890,000. If inflation in the neighbourhood is said to be an average of 2% p.a., what would the house be worth in 2030?
$2,214,436.23
A particular stock loses an average of 1.2% p.a. After 2 years of investing in this stock, its value is $317.25. How much was originally invested?
$325
What is ONE of the Compound Interest formulas?
A = P(1+r)t
OR
A = P(1-r)t
How long would it take for a $10,000 loan to grow to $16,720 if the interest rate on the loan is 4.2% p.a.?
16 years
A $20,000 car depreciated to $3,500 in 12 years. What was the average estimated depreciation rate for this car?
$1375/year
A bond pays 4.6% p.a. and $56,000 is invested. After 15 years, how much interest has been earned on the bond?
$53,941.91
$1,890,000