Section A
Question 1
With an interest rate of 3.8% p.a., $1 710 was earned in simple interest over 6 years. Find the principal invested
Question 2
Esther buys a personal computer for $3 000. She pays a deposit of $600, borrows the remainder at a flat rate of 10% p.a. and agrees to repay the balance in 8 equal quarterly repayments. The amount of each repayment is:
A. $300 B. $360 C. $373 D. $400 E. $450
Question 3
A car, when new, is valued at $30 000. Its value depreciates by 15% in the first year and 10% each year thereafter. Its value, to the nearest dollar, at the end of the third year is:
A. $9 345 B. $10 500 C. $19 500 D. $20 655 E. $21 870
Question 4
A yacht was purchased in 1990 for $120 000 and sold 5 years later for $104 000.
The flat rate of depreciation (p.a.) over this period, correct one decimal place, is:
A. 26.7% B. 13.3% C. 1.3% D. 2.7% E. 16.0%
Question 5
Joanne buys a stereo system for $1400. Under a hire purchase agreement she is required to pay a deposit of $200 and pay the balance in regular equal monthly repayments over two years. Interest is charged at a flat rate of 12% per annum.
The effective interest rate paid by Joanne will be closest to:
A. 0.5% B. 1.0% C. 6.0% D. 12.0% E. 23.0%
Question 6
What is the interest rate charged (correct to one decimal place) on a reducing balance loan of $15 000 which is amortised (paid-off) with 40 quarterly instalments each of $560 ?
A. 8.5% B. 4.9% C. 3.7% D. 22.5% E. 1.5%
Question 7
Equipment costing $20 000 is depreciating at 15% p.a. After 8 years its value is:
A. $3000 B. $4000 C. $5450 D. $6412 E. $17000
Question 8
Minnie purchased a second-hand car for $10 250. She paid a deposit of $2000 and repayments of $300 per month over 3 years.
The total amount of interest Minnie paid is:
A. $550 B. $2550 C. $4550 D. $6650 E. $7200
Question 9
Kelly invests $8500 at 6% per annum, compounding quarterly.
The amount of interest she earns during the fourth year of the investment is closest to:
A. $521.59 B. $623.62 C. $2231.05 D. $2286.38 E. $4489.32
Question 10
The amount owing, correct to the nearest dollar, on a $11 962.22 loan (to buy a painting) after 8½ years borrowed at 6% p.a. compound interest adjusted monthly and repaid at the rate of $150 per month is:
A. $0
B. $1196 C. $3338
D. $5420 E. $9588
Section B
Question 1
Remy has purchased a digital camera for $650, to be used for work, and he wants to depreciate its value over five years.
a) What will be the book value of the camera at the end of five years, using flat rate depreciation at the rate of 12% per year?
b) What will be the book value of the camera at the end of five years, using reducing balance depreciation rate of 15% per year.
c) If the scrap value of the camera is $100, how long will it take to reach this value by each method?
(i) Flat rate method:
(ii) Reducing balance method:
Question 2
Belinda has a major problem with her credit card after her Christmas shopping spree.
She now owes $4 960.
Her credit card conditions require that she makes a minimum payment of 1.5% of the amount owing or
$25.00, whichever is the greater, and her ongoing interest rate is 18% p.a., calculated on the outstanding balance each month.
a) What is her minimum monthly payment?
b) What will happen with her credit card balance if she makes the minimum monthly payment?
Question 3
On the 5th of March, Mary received a statement from her bank with 7 missing entries. (Shaded boxes)
Her bank pays 2.5% p.a. on the minimum monthly balance.
Fill in the statement below, using your answers to questions (a) - (d) to help you.
Date Transaction Debit Credit Balance
1 Jan Balance forward 6850.12
6 Jan Withdrawal
1 Feb Interest (January) 9.51
15 Feb Cheque- Deposit 780.00
17 Feb Rent Withdrawal 1,400.00
1 Mar Interest (February)
a) Use the Interest (January) amount to calculate the Balance on Jan 6.
b) Use this Balance on 6 Jan to calculate the Withdrawal amount of 6 Jan
c) Complete the Balances for 1 Feb to 17 Feb.
d) Calculate the Interest for February and then the Balance on 1 Mar.
Question 4
Lena is considering three options for a five-year investment.
Investment Option A
$10 000 is deposited into an account with an interest rate of 4.8% per annum compounding monthly for five years.
(a) Calculate the value of Investment Option A at the end of five years. Write your answer correct to the nearest cent.
Investment Option B $4 000 is deposited into an account with an interest rate of 4.8% per annum compounding monthly. At the end of each month, for a period of five years, a further $100 is deposited after interest has been paid.
(b) Determine the value of Investment Option B at the end of five years (immediately after the $100 has been deposited). Write your answer correct to the nearest cent.
Investment Option C
Investment Option B is followed for two years. After this, the amount deposited at the end of each month is changed. With the new monthly deposit, Investment Option C is worth $13 000 at the end of the five years.
(c) Find the new amount deposited at the end of each month for the remaining three years. Write your answer correct to the nearest cent.
(d) Determine the total amount of interest earned by Investment Option C over the five-year period.