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

When PpY and CpY are different Problem set A Answers

Skills

    1. (a) N = 8, PpY = 1, CpY = 12
    2. (b) N = 60, PpY = 12, CpY = 4
    3. (c) N = 40, PpY = 4, CpY = 12

  2. $6 738.04 (N = 6, PpY = 1, CpY = 12)

  3. £43 231.36 (N = 120, PV = 0, Pmt = −300, PpY = 12, CpY = 4)

  4. €1 869.24 (N = 60, PV = −90 000, FV = 0, PpY = 4, CpY = 12)

In context

  1. (a) £377.42 a month, total £22 645.48. (b) £4 634.34 a year, total £23 171.72. Yearly costs £526.24 more: the balance stays higher for longer, so more interest is charged.

Stretch

  1. N counts payments. PpY is how many payments are made in a year. CpY is how many times interest is added in a year. N = years × PpY, and CpY is not in that.

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