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

When PpY and CpY are different Problem set B Answers

Skills

    1. (a) N = 5, PpY = 1, CpY = 4
    2. (b) N = 48, PpY = 12, CpY = 2
    3. (c) N = 24, PpY = 2, CpY = 4

  2. €8 457.11 (N = 7, PpY = 1, CpY = 12)

  3. €28 684.88 (N = 96, PV = 0, Pmt = −250, PpY = 12, CpY = 4)

  4. £3 091.71 (N = 48, PV = −120 000, FV = 0, PpY = 4, CpY = 12)

In context

  1. (a) $775.01 a month, total $37 200.29. (b) $9 560.13 a year, total $38 240.54. Yearly costs $1 040.25 more: the balance stays higher for longer, so more interest is charged.

Stretch

  1. N = 28, PpY = 4, CpY = 12. N counts payments, 7 × 4 = 28. CpY only says how often interest is added, so changing it to 1 does not change N.

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