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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 B

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

Each question matches the question with the same number in set A. Do the ones you got wrong there.

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 5 years, interest compounded quarterly
    2. (b) Monthly savings for 4 years, interest compounded half-yearly
    3. (c) Withdrawals every six months for 12 years, interest compounded quarterly

  2. A school borrows €48 000 at 5.4% per year, compounded monthly, and repays it in equal instalments at the end of each year for 7 years. Find the annual repayment.

  3. €250 is saved at the end of every month for 8 years in an account paying 4.4% per year, compounded quarterly. Find the final amount.

  4. £120 000 earns 3.6% per year, compounded monthly. Equal withdrawals are made at the end of each quarter for 12 years, emptying the account. Find each withdrawal.

In context

  1. A loan of $33 000 at 6% per year, compounded monthly, runs for 4 years. Compare the total repaid if it is repaid (a) monthly, (b) once a year. Explain the difference.

Stretch

  1. For a loan repaid every quarter for 7 years, with interest compounded monthly, state N, PpY and CpY. Explain in a sentence why N would not change if the interest were compounded yearly instead.

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