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IB Mathematics: Applications and Interpretation SL · 12.2: Finance · 12.2.1

Name Date

Finance Solver: compound interest and depreciation Problem set B

Use the Finance Solver. Write down every box you fill in. Money you hand over is negative.

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 for each of these.

    1. (a) 7 years, compounded quarterly
    2. (b) 42 months, compounded monthly
    3. (c) 9 years, compounded half-yearly
    4. (d) 4 years, compounded monthly

  2. Find the final value.

    1. (a) £6500 at 2.8% per year, compounded yearly, for 7 years
    2. (b) $9000 at 3.6% per year, compounded monthly, for 4 years

  3. How much must be invested now at 3.8% per year, compounded half-yearly, to have €12 000 in 9 years?

  4. $4000 is invested at 4% per year, compounded yearly. After how many complete years is it first worth more than $6000?

  5. £8000 grows to £9500 in 5 years, compounded yearly. Find the annual interest rate.

  6. £7500 is invested at 4.2% per year, compounded monthly. How long will it take for the investment to be worth £9000? Give your answer in complete months, and then in years and months.

In context

  1. A used car costs $15 000 and loses 16% of its value each year. (a) Find its value after 4 years. (b) After how many complete years is it first worth less than $5000?

  2. £6500 is invested at 5.4% per year, compounded yearly, for 7 years. Inflation is 2.4% per year. Find the value of the investment in real terms.

  3. A club puts £9500 into a fund for 8 years. Offer 1 pays 3.6% per year, compounded annually. Offer 2 pays 3.5% per year, compounded quarterly. Which offer is worth more after 8 years, and by how much?

  4. A tablet is bought for €800 and loses 25% of its value each year. (a) Find its value after 2 years. (b) After how many complete years is it first worth less than half of its price?

Stretch

  1. £16 000 is invested at 4.2% per year for 12 years. Find how much more it is worth if the interest is compounded quarterly rather than yearly.

jmaths.xyz · AI SL · 12.2.1 Finance Solver: compound interest and depreciation