Simple Interest
Methods of Purchase
Compound Interest
Depreciation
Flat Rate Loans
100
State the formula for simple interest, including what each letter represents
I = PRN I - interest, P - Principle, R = interest rate, N = number of time periods
100
You buy a sports car for $125 000. You pay in cash so the dealer offers you 6% off the marked price. How much do you pay for the car?
$117 500
100
$3000 is invested at 8% p.a., compounding annually. Find the final value of the investment after 4 years to the nearest dollar.
$4081
100
In your own words, describe what depreciation is. Give an example of something that depreciates, as well as something that does not depreciate.
Depreciation is a reduction in the value of an asset over time. Possible examples - cars depreciate, antiques do not.
100
What is a mortgage?
A home loan from a bank.
200
Find 0.07% of $3000, to the nearest cent.
$2.10
200
You buy a horse priced at $5000 by paying a 10% deposit and then the remaining cost in equal monthly payments over 2 years. Find the amount of the equal monthly repayment.
$187.50 per month
200
In your own words, explain the difference between simple and compound interest rates.
Simple interest applies the same amount of interest every period, however compound interest calculates new interest amounts of the new principal at the end of every interest period.
200
State the formula for calculating depreciation, stating what each term represents.
A = P(1 - r)^n A = value of asset at the end of n periods P = initial value of the asset r = rate of depreciation, % per period.
200
If you are paying off a loan by paying monthly installments of $190 over 2.5 years, how much will you repay in total?
$5700
300
Calculate the simple interest earned on an investment of $1750 for 3 years at 1.5% p.a.
$78.75
300
In your own words, what is the difference between purchasing something on lay-by as opposed to buying an item on terms? Which one will cost you more?
Lay-by is paying off an item over time and then having the item. By buying on terms you will HAVE the item while you pay it off (plus interest) which will cost you more.
300
Calculate the value after 7 years of a $15 000 investment, invested at 6% p.a., compounding every 6 months. Answer to the nearest cent.
$22 688.85
300
A spaceship loses value at a rate of 4% per Earth year. If the spaceship was initially bought for $200 000, what is its value after 7 Earth years?
$150 289
300
You take out a loan for $20 000 to buy 200 cats. If you repay the loan in equal monthly repayments of $482 over 4.5 years, how much will you repay in total and how much interest will you pay?
Total = $26 028 Interest = $6 028
400
Calculate the simple interest earned if $18 600 is invested at 0.73% per month for 1 year
$1629.36
400
A $600 watch is purchased by paying a 5% deposit, and then 8% interest is charged on the remaining balance to be paid off in installments. Find the total amount paid for the watch.
$645.60 in total
400
Find the amount of interest earned on $4500, invested for 9 years at 8% p.a. compound interest, compounding quarterly. Answer to the nearest dollar.
$4679
400
A computer depreciates at a rate of 4% per six months. How much value will the computer lose in its first 5 years if it was purchased for $900?
$302
400
You take out a $120 000 flat rate loan to buy a hummer. You are offered a loan at 5% per annum over 10 years. Calculate the equal monthly repayment needed to pay off the hummer in 10 years.
$1500
500
Calculate the simple interest rate (% p.a.) if $2300 invested for 6 years and earns $690 in interest.
5% p.a.
500
You buy 4 $300 festival tickets on terms. You pay a 10% deposit, with 6% p.a. being charged on the balance owing over 2 years. Find the equal monthly repayment.
$50.40 per month
500
What amount of money must be invested at 5% p.a. compound interest for 4 years in order to amount to $3647 at the end of the investment? Answer to the nearest dollar.
$3000
500
A smooth talking salesman tells you that a car depreciating at 10% p.a. will lose half its value in 7 years. Is he lying? Justify your response.
He is telling the truth!
500
Batman borrows $25 000 to buy a new cape. He repays the loan in fortnightly installments of $256 over 5 years. Calculate how much he will repay, how much interest he will pay, as well as the interest rate of the loan (p.a.).
Total amount = $33 280 Interest = $8 280 Rate = 6.624% p.a.
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