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IB Mathematics: Applications and Interpretation HL · 12.2: Finance · 12.2.3

Name Date

When PpY and CpY are different Problem set A

Use the Finance Solver. For each question write N, PpY and CpY before anything else.

Difficulty: first skills applying them stretch

Skills

  1. Write down N, PpY and CpY for each of these.

    1. (a) A loan repaid once a year for 8 years, interest compounded monthly
    2. (b) Monthly savings for 5 years, interest compounded quarterly
    3. (c) Withdrawals every quarter for 10 years, interest compounded monthly

  2. A business borrows $35 000 at 4.2% per year, compounded monthly, and repays it in equal instalments at the end of each year for 6 years. Find the annual repayment.

  3. £300 is saved at the end of every month for 10 years in an account paying 3.6% per year, compounded quarterly. Find the final amount.

  4. €90 000 earns 3% per year, compounded monthly. Equal withdrawals are made at the end of each quarter for 15 years, emptying the account. Find each withdrawal.

In context

  1. A loan of £20 000 at 5% per year, compounded monthly, runs for 5 years. Compare the total repaid if it is repaid (a) monthly, (b) once a year. Explain the difference.

Stretch

  1. Explain in a sentence each what N, PpY and CpY count, and why changing CpY never changes N.

jmaths.xyz · AI HL · 12.2.3 When PpY ≠ CpY