The Finney Maths Lab



Simple interest WS2

| |Tony borrows $600 from a bank and agrees to pay back $613.80 at the | | |

| |end of 4 months. What interest rate is he being charged per month? | | |

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| |Jill borrowed $2000 for a period of 9 months. She paid back $2121.50 | | |

| |at the end of that time. How much would she have repaid if she had | | |

| |borrowed the money for 1 year at the same interest rate? | | |

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| |Samantha invested $4000 at 5.2% per annum interest for 5 years. What | | |

| |was the amount of her investment at the end of this time? | | |

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| |$10 000 is borrowed at 10.5% per annum interest. How much interest is | | |

| |owed at the end of the first 10 months? | | |

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| |How much interest would Charles receive if he invested $2500 for 1 | | |

| |year 8 months at 7.5% p.a. simple interest? | | |

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| |Calculate the interest earned on an investment of a million dollars | | |

| |for 1 day at 6.25% p.a. | | |

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| |Ryan said that he would earn the same amount of money on an investment| | |

| |(at a given interest rate) if he invested half the amount of money for| | |

| |twice the length of time. Show whether he is correct. | | |

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| |Tom borrowed $10 000 to do some improvements to his home. The bank | | |

| |advised him that if he took the loan over 4 years, he would repay $12 | | |

| |500 at the end of the 4 years. What would he repay if he had taken the| | |

| |loan over 5 years at the same interest rate? | | |

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| |Shun invests $2800 in a term deposit for 5 years at an interest rate | | |

| |of 8.75% p.a. The interest is paid yearly to him. | | |

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| |(a) How much interest does Shun earn each year? | | |

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| |(b) How much interest will he earn over the life of the term deposit? | | |

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| |Matt took out a term deposit with an investment of $20 000 for 6 years| | |

| |at 5.95% p.a. simple interest. The interest is paid yearly to him. | | |

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| |(a) How much interest does Matt earn each year? | | |

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| |(b) How much interest will he earn over the life of the term deposit? | | |

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| |(c) Matt initially took out the term deposit to pay for an overseas | | |

| |holiday he estimated to cost $26 000. Could he have taken out his term| | |

| |deposit for a shorter period? Explain. | | |

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Simple interest WS2

| |Tony borrows $600 from a bank and agrees to pay back $613.80 at the |Interest charged = $613.80 − $600 | |

| |end of 4 months. What interest rate is he being charged per month? |= $13.80 | |

| | |Interest rate = [pic] | |

| | |= 2.3% | |

| | |This is the interest rate charged over 4 months. | |

| | |Monthly interest rate = 2.3% ÷ 4 | |

| | |= 0.575% | |

| |Jill borrowed $2000 for a period of 9 months. She paid back $2121.50 |Interest charged = $2121.50 − $2000 | |

| |at the end of that time. How much would she have repaid if she had |= $121.50 | |

| |borrowed the money for 1 year at the same interest rate? |Interest rate per month = [pic] | |

| | |= 0.675% | |

| | |Interest on $2000 charged for 12 months | |

| | |= 0.675% of $2000 × 12 | |

| | |= $162 | |

| | |Amount paid back = $2000 + $162 | |

| | |= $2162 | |

| | |Jill would have repaid $2162 at the end of 1 year. | |

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| |Samantha invested $4000 at 5.2% per annum interest for 5 years. What |Interest = [pic] | |

| |was the amount of her investment at the end of this time? |= $1040 | |

| | |Amount = $4000 + $1040 | |

| | |= $5040 | |

| |$10 000 is borrowed at 10.5% per annum interest. How much interest is |Interest = [pic] | |

| |owed at the end of the first 10 months? |= $875 | |

| | |$875 interest is owed at the end of the first 10 months. | |

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| |How much interest would Charles receive if he invested $2500 for 1 |Interest = [pic] | |

| |year 8 months at 7.5% p.a. simple interest? |= $312.50 | |

| | |Charles would receive $312.50 in interest. | |

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| |Calculate the interest earned on an investment of a million dollars |Interest = [pic] | |

| |for 1 day at 6.25% p.a. |= $171.23 | |

| | |The interest earned is $171.23. | |

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| |Ryan said that he would earn the same amount of money on an investment|Assume an initial investment of $1000 for 1 year at 5% p.a. simple | |

| |(at a given interest rate) if he invested half the amount of money for|interest. | |

| |twice the length of time. Show whether he is correct. |Interest = [pic] | |

| | |= $50 | |

| | |Compare with an investment of $500 for 2 years at 5% p.a. simple | |

| | |interest. | |

| | |Interest = [pic] | |

| | |= $50 | |

| | |Ryan is correct in his statement. | |

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| |Tom borrowed $10 000 to do some improvements to his home. The bank |Interest over 4 years = $12 500 − $10 000 | |

| |advised him that if he took the loan over 4 years, he would repay $12 |= $2500 | |

| |500 at the end of the 4 years. What would he repay if he had taken the|Interest rate over 4 years = [pic] | |

| |loan over 5 years at the same interest rate? |= 25% | |

| | |Interest rate per year = 25% ÷ 4 | |

| | |= 6.25% | |

| | |Interest paid on loan over 5 years | |

| | |= [pic] | |

| | |= $3125 | |

| | |Total to be repaid on a 5-year loan | |

| | |= $10 000 + $3125 | |

| | |= $13 125 | |

| | |Tom would repay $13 125 if he took out the loan for 5 years. | |

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| |Shun invests $2800 in a term deposit for 5 years at an interest rate | | |

| |of 8.75% p.a. The interest is paid yearly to him. | | |

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| |(a) How much interest does Shun earn each year? | | |

| | |(a) Yearly interest = 8.75% of $2800 | |

| | |= $245 | |

| |(b) How much interest will he earn over the life of the term deposit? |Shun earns $245 in interest each year. | |

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| | |(b) Interest earned over 5 years | |

| | |= $245 × 5 | |

| | |= $1225 | |

| | |Shun earns a total of $1225 over 5 years. | |

| |Matt took out a term deposit with an investment of $20 000 for 6 years| | |

| |at 5.95% p.a. simple interest. The interest is paid yearly to him. | | |

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| |(a) How much interest does Matt earn each year? | | |

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| | |(a) Yearly interest = 5.95% of $20 000 | |

| |(b) How much interest will he earn over the life of the term deposit? |= $1190 | |

| | |Matt earns $1190 in interest each year. | |

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| | |(b) Interest earned over 6 years | |

| |(c) Matt initially took out the term deposit to pay for an overseas |= $1190 × 6 | |

| |holiday he estimated to cost $26 000. Could he have taken out his term|= $7140 | |

| |deposit for a shorter period? Explain. |Matt earns a total of $7140 over 6 years. | |

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| | |(c) In 5 years, Matt would have earned | |

| | |$1190 × 5 = $5950 from his term deposit. He is just $50 short of his | |

| | |target of $6000. This means that if Matt could add $50 to his term | |

| | |deposit from other funds, he could make his investment for the shorter| |

| | |period of 5 years. | |

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