FINANCIAL MATHS (PART 2 )

These are exam -style questions .

QUESTION 1 

a) Bob runs a small car wash business. He starts saving for new equipment , by investing at 7.5% p.a compounded quarterly.

i) What effective rate would give him the same return on his investment? (3) 

ii) Bob deposits R10000 immediately .

The interest rate for the first year is 7.5% compounded quarterly .

At the end of the first year, the interest rate changes to 7.8% compounded monthly. 

6 months later , the rate again changes to 7% compounded monthly and he deposits another R5000.

What would the investment be worth at the end of the 3rd year  (6) 

QUESTION 2 

A school decides that they are going to invest R60000 at 12% p.a compounded monthly inorder to put up floodlights on the Hockey AstroTurf. Three years later, the interest rate drops to 1% and it was compounded quarterly . Four years after the first investment , R10000 is withdrawn to buy rugby poles. What is the total investment worth 13 years after the first investment was made (5)

QUESTION 3 

Calculate the rate of depreciation required for a fridge to halve its value from R10000 to R5000 over 6 years , on a reducing balance method (3) 

QUESTION 4 

Suzie opened a savings account by depositing R15000 immediately . 2 Years later, she withdrew Rx . After a further 3 years , she deposited another R21500 . At the end of 6 years , she had R30000 in her bank account . Interest is compounded at 6% p.a compounded monthly.

Calculate the value of x (5) 

QUESTION 5 

Lisa invested R14500 in a bank for a period of 8years at 6.5% p.a compounded monthly for the first 5 years and at 8.4% p.a effective for the remaining period. If Lisa runs into financial difficulties and withdraws R3000 after 6 years , calculate how much her investment is worth at the end of 8 years (7) 

QUESTION 6 

A savings account was opened with an initial deposit of R24000 . Eighteen months later R7000 was withdrawn from the account . Calculate how much money will be in the savings account at the end of 4 years  if the interest rate was 10.5% p.a compounded monthly (9) 

QUESTION 7 

Jacob receives a loan and will repay the loan with equal payments of R5000 . The loan will be paid off in 3 years.

• The first payment will be made after the first year 
• The second payment will be made after the second year 
• The last payment will be made after the third year 
• Interest will be 15% p.a compounded quarterly

Determine the original value of the loan ? (9) 

QUESTION 8 

Babalwa has three sons. She wants to give each of them R60000 at the end of the year in which they turn 18. She plans to invest a single lump sum into a fund on the 1st of January 2015 . The fund will earn interest at a rate of 7.9% per annum, compounded monthly for the first four years. After that , it will earn 10.5% per annum compounded half-yearly . On the 1st of January 2015, her sons will be 8,11 and 14 years old respectively . Calculate the value of the deposit that should be made (10) 

QUESTION 9 

A savings account was opened with an initial deposit of R24000 . Eighteen months later R7000 was withdrawn from the account. Calculate how much money will be in the savings account at the end of 4 years if the interest rate was 10.5% p.a compounded monthly (5)