INTERESTING FACTS
When calculating the interest rate for a fortnight, what do you do to the percentage rate per annum ?
Divide by 26
In flat rate depreciation, what is the recurrence relation ?
V0 = initial value. Vn+1 = Vn - D
WHICH MENU BUTTONS do you push to get to the FINANCE SOLVER
MENU 8 / 1
What do you call the amount paid back to the bank each period of time?
PAYMENT
What is the name given to an amount put into the bank?
DEPOSIT
$3000 is invested at a simple interest rate of 6.5% per annum. The total interest earned in three years is...
$585
In reducing balance depreciation, what is the recurrence relation ?
State V0 , Vn+1 = R x Vn
R = (1 - r/100)
WHICH MENU BUTTONS do you push to convert NOMINAL interest to EFFECTIVE interest ?
MENU 8 / 5 / 2
Consider the recurrence relation
V0=10 000, Vn+1=1.04Vn - 500
What could this recurrence relation be used to model?
A reducing balance loan (or an annuity)
(for $10000, pmts $500, interest of 4%)
An investment where the principal is withdrawn in consistent, regular installments over time until the balance reaches zero is called...
AMORTISING ANNUITY
$12 000 is invested for 12 months. For the first six months the interest rate is 6.1% per annum compounding monthly.
After six months the interest rate increases to 6.25% per annum compounding monthly.
The total interest earned by this investment over 12 months is (to the nearest dollar) ?
$762.33
Geoff purchased a car for $4500. The car drives an average of 10 000km per year. If the value of his car depreciates at $ 500 per year. What is the Unit Cost per kilometre ?
5 cents per km
Convert a nominal rate of 5% p.a to an effective monthly rate. (correct to 2 decimal places)
5.12%
An amortisation table for a reducing balance home loan of $250 000 shows vital information. The interest rate for this loan is 4.8% per annum. The loan is to be repaid with monthly payments of $1500.
What is the amount of payment number 2 that goes towards reducing the principal of the loan?
$502
Michael invests $1200 for two years.
Interest is calculated at the rate of 3.35% per annum, compounding monthly.
The amount of interest he earns in two years is ?
$83.03
Millie invested $10 000 in an account at her bank with interest compounding monthly. After one year, the balance of Millie’s account was $10 490.70
Find the difference between the rate of interest per annum used by her bank and the effective annual rate of interest for Millie’s investment is (to 2 dec.places)
0.11
A photo-copier machine is purchased for $25 000. It prints 16 000 items each quarter and depreciates by $400. The value of the machine is depreciated using a unit cost method of depreciation. If the company decides to sell the machine for a scrap value of $5000, how many prints has it done ?
800 000
In a PERPETUITY of $123 456, in FINANCE SOLVER what are the values for PV and FV ?
PV = -123 456, FV = + 123 456
Harriet borrowed $345 000 to buy a house. The interest rate was 4.35% per annum, compounding monthly.
Harriet made monthly repayments of $2800.
The final payment was a different amount. What was it ?
$1518.84
Robert has a perpetuity of $60000 invested and receives a regular quarterly payment of $637.50.
Find the interest rate of his investment
4.25%
Tarquin plays the drums! He would like to buy a new drum kit and has saved $2000.
Tarquin invests this in an account that pays interest compounding monthly and is described using the recurrence relation Tn+1=R x Tn
The total interest earned in the first five months is $36.26. What is R ?
1.0036
Jacob's caravan had a purchase price of $38 000. After eight years, the caravan has a reducing balance depreciated value of $26 000. What is the rate of depreciation ? (answer to 1 decimal place)
4.6% p.a.
I take out a personal loan for $28 000 and pay it off at $590/month for 5 years, use FINANCE SOLVER to calculate the interest rate (correct to 2 d.p.)
9.64% p.a
Annie borrows $380 000 in a reducing balance loan with interest at 5.24%. After 10 years of payments at $2500 per month, she pays off $100 000 as a lump sum. To finish paying off her loan in another 10 years what will her new monthly payments be ?
$1584.72
Sarah invests $5000 in her savings account that pays interest at 3.9% compounded quarterly. At the end of each quarter she deposits an additional $200. What is her balance after 2 years ?
$7059.25