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Financial Mathematics 1:
Credit and Borrowing
r Book - Series M-1
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Financial Mathematics – Credit and
Financial mathematics 1: Credit
borrowing
Topic TEST
Test TOPIC
and borrowing
PART AI
SECTION
Instructions
• 10 multiple-choice questions
Instructions
•
10
multiple
choice questions
• Each question is worth 1 mark
• Each question is worth 1 mark
Fill in only ONE CIRCLE
• Fill in• only
ONE CIRCLE
• Calculators
• Calculators
may bemay
usedbe used
Time allowed: 12 minutes
Total marks = 10
Time allowed: 12 minutes
Total marks: 10
1 The simple interest on $860 borrowed at 8.5% p.a. for 3 years is:
A $73.10
B
$219.30
C
$1098.47
D
238.47
2 If $4800 is borrowed for 5 years and simple interest of $2100 is paid, the interest rate per year is:
A 6.8%
B
7.5%
C
7.72%
D
8.75%
3 $2000 invested for 2 years at 10% p.a. compound interest (paid annually) would amount to:
A $2400
B
$2420
C
$2666
D
$5000
4 $15 000 invested for 4 years at 6.7% p.a. compounded quarterly would amount to:
A $19 566.73
B
$18 665.72
C
$19 283.61
D
$18 823.16
5 $3000 is invested. Interest is paid and compounded every 6 months at a rate of 8% p.a.. How much interest
is paid in 5 years?
A $1407.98
B
$1200
C
$1326.35
D
$1440.73
6 Nick borrows $80 000 to start a restaurant. Interest is calculated at 10.25% p.a.. After 1 year he makes
his first repayment of $20 650. The amount he then owes is:
A $57 550
B
$59 550
C
$62 550
D
$67 550
7 Jenny has a credit card with an interest rate of 0.05% per day with no interest free period. Jenny used her
credit card to pay for car repairs costing $640. She paid the credit card account 20 days later. What is the
total amount (including interest) that she paid for the repairs?
A $640.32
B
$646.40
C
$672.00
D
$774.40
8 John takes a loan of $15 000 over 60 months. The repayment rate is $290.50 per month. How much interest
will John pay?
A $2050
B
$2363
C
$2430
D
$2672
9 The price of a new car is $35 800. Sarah buys this car on terms of 20% deposit and 40 monthly payments
of $835. How much more does she pay by buying the car on terms?
A $4536
B
$4760
C
$4300
D
$4139
10 A loan of $5000 is taken over 3 years. The flat rate of interest is 7% p.a. The amount of each monthly
instalment is closest to:
A $168
108
B
$140
C
$1189
D
$431
EXCEL HSC GENERAL MATHEMATICS REVISION & EXAM WORKBOOK
Total marks achieved for PART A
Financial mathematics 1: Credit and borrowing
Mathletics Instant Workbooks – Series M Copyright © 3P Learning
10
ii
Financial mathematics 1: Credit and borrowing
Topic TEST
Test
TOPIC
PART BII
SECTION
Instructions • This section consists of 6 questions
Instructions • This section consists of 6 questions
• Show all necessary working
• Show
all necessary working
Time allowed: 30 minutes
Total marks = 25
Time allowed: 30 minutes
Total marks: 25
11 Stacey buys a computer priced at $4800. She pays a deposit of 10%, then monthly payments of $225 for
2 years.
a How much interest does she pay overall?
3 marks
b What per annum simple interest rate has been charged?
2 marks
12 Adrian has a credit card that has a simple interest rate of 24.25% p.a.
a Convert the interest rate to a daily percentage rate correct to 5 decimal places.
1 mark
b Adrian has an outstanding balance of $865 for a period of 21 days. How much interest
will he be charged?
2 marks
13 $75 000 was borrowed at 9% p.a. interest. The following table applies to the first four months of the loan.
N
Principal (P)
Interest (I)
P+I
P+I–R
1
$75 000
$562.50
$75 562.50
$74 712.50
2
$74 712.50
$560.34
$75 272.84
$74 422.84
3
$74 422.84
$558.17
$74 981.01
$74 131.01
4
$74 131.01
$555.98
$74 686.99
$73 836.99
a What amount will appear in the Principal column for the fifth month?
1 mark
b How much is each repayment (R)?
1 mark
c How much interest would be charged in the fifth month?
1 mark
CHAPTER 8 – Financial Mathematics – Credit and borrowing
Financial mathematics 1: Credit and borrowing
Mathletics Instant Workbooks – Series M Copyright © 3P Learning
109
iii
d What amount will appear in the Principal column for the sixth month?
2 marks
14 David borrowed $5000 at a flat interest rate of 8% p.a. to buy a new stereo system. Find his monthly
repayment (to the nearest cent) if he pays off the loan in 3 years.
3 marks
15 A bank published the following table on its web site to show the monthly repayments if $100 000 is
borrowed at its current interest rate.
Loan period in years
10
15
20
25
30
Monthly repayments
$1021.98
$749.75
$616.57
$538.94
$489.02
a Ilona considers borrowing $100 000 over 20 years. How much would she repay in total?
1 mark
b How much interest would she pay?
1 mark
c How much interest would she pay if she borrowed $100 000 over 10 years?
2 marks
d Derek wants to borrow $125 000. Use the table to find out how much each monthly instalment would
be if the term of the loan is 30 years.
1 mark
e How much extra would Derek need to repay each month to repay the loan in 25 years rather than 30?
2 marks
16 Stephanie’s financial institution has approved a $6000 personal loan. The loan is to be taken over 3 years
and a flat rate of 7.5% p.a. interest will be charged. There is a loan establishment fee of $150 and loan
management fees of $5 per month. How much will Stephanie repay in total?
2 marks
110
EXCEL HSC GENERAL MATHEMATICS REVISION & EXAM WORKBOOK
Total marks achieved for PART B
Financial mathematics 1: Credit and borrowing
Mathletics Instant Workbooks – Series M Copyright © 3P Learning
25
iv
n
4
8
16
24
32
48
64
C
48
24
12
8
6
4
3
50
40
30
C = 192
Answers – Financial mathematics 1: Credit2010and borrowing
n
10 20 30 40 50 60 70
1
Page 100
1
a $2808
b $520
c $937.50
d $1213.33
e $205.48
f $200
2
a 12.5%
b $12 500
n
c 3 years
d $4500
Page
Page
Page
2
101
1 a $8000 b $466.67 2 a $600 b $2400 c $1080 d $3480 e $96.67 3 a $14 780 b $246.33
3
102
1 a $9675 b $22 575 c $376.25 2 a $78 750 b $4775 3 a $12 600 b 6.5% p.a.
4
103
1 a $6381.41 b $16 777.49 2 a $1996.80 b $16 226.60 3 $89 018.14 4 a $102 891.00
b $72 891.00
5
Page 104
5 $2720.77
1 a $1930
b $463 200
c $110
d $82 800
2 a $34
b $1600
c $5634
d $93.33
e $320.00
f $16.67
Page 105
6
1 a $1178.40 b To pay the least amount of interest Amy should try to repay the loan in the shortest possible
time but she would need to have sufficient income to be able to pay the larger monthly instalments. 2 a Option A: Kylie will
repay an additional $840 with Option A and an additional $735.50 with Option B. b Option B: $154.60 per month compared with
$120.56 per month for Option A. c Kylie may not have the money for the deposit d She could afford to pay the higher monthly
instalments.
7
Page 106
1 a $416.40 b $7.82 2 a $143.93 b $120.00
8
Page 107
1 a $890 b $831.54 c $58.46 d $79 769.76 2 a $100 000 b 10% p.a. c $900 d $830.51
e $100 491.57 f $99 591.57
9
Page 108
1 B 2 D 3 B 4 A 5 D 6 D 7 B 8 C 9 B 10 A
10
Page 109
11 a $1080 b 12.5% 12 a 0.06644% b $12.07 13 a $73 836.99 b $850 c $553.78
11
Page 110
d $73 540.77 14 $172.22 15 a $147 976.80 b $47 976.80 c $22 637.60 d $611.28 e $62.40
16 $7680
Page 111 1 a i $630 ii $661.50 iii $694.58 iv $729.30 b i $2715.38 ii $315.38 2 a $600 b It has
been immediately withdrawn c 5 months. d $103.81 e The first amount invested earns interest for 5 months so, using the
compound interest formula, its value is given by 100(1.0075)5. The second amount earns interest for 4 months so its value is 100
(1.0075)4 and so on. The last amount earns no interest so its value is 100. The total value of the investment is the sum of these
amounts. f $611.36
Page 112 1 a 3450.44 b 42 576.09 c 28 512.88 d 825 833.74 2 a 499.99 b 149.94
Page 113 1 $171 825.00 2 $131 615.51 3 a $7342.98 b $67 880.28 4 $207 473
206
EXCEL HSC GENERAL MATHEMATICS REVISION & EXAM WORKBOOK
Financial mathematics 1: Credit and borrowing
Mathletics Instant Workbooks – Series M Copyright © 3P Learning
v