TUTORIAL 4a

INTEREST AND DISCOUNT

1. RM700 is invested on 4 May 2012 at a simple interest rate of r% per

annum. The amount on 3 June 2012 using Banker’s Rule is RM705.25.
Find the interest rate, r.
I=Prt
RM5.25=RM700r(30/360)
r=0.09%

2. How long do we need to invest RM700 at a simple interest rate of 4% per

annum if we want an interest of RM150?
I=Prt
RM150=RM700(4/100)t
t=5.36years

3. Imanda borrowed RM5,000 from a bank on 30 March 2018. If the

accumulated amount is RM5021.67 and the simple interest is 6% per
annum, find the date of repayment using Banker’s Rule.
I=Prt
RM21.67=RM5000(6/100)t
t=0.072years t=exact time/360

Banker’s Rule
t=0.072yearsx360days
t=26days after 30 March is * 25th April 2018

4. On 1st January 2017, a sum of RM30,000 was invested in an account at

4% compounded quarterly. Beginning 1 st January 2020, the interest rate
was changed to 7.5% compounded semi-annually. Calculate the maturity
value of this investment on 1st January 2021.
2017-2020 (3 years) is 4% 4 times 2020-2021(1 years) is 7.5% 2 times
i=k/m n=mt i=k/m n=mt
i=0.04/4 n=4(3) i=0.075/2 n=2(1)
i=0.01 n=12 i=0.0375 n=2

S=P(1+i)^n
S=RM30 000(1+0.01)^12
S=RM33 804.75

S=P(1+i)^n
S=RM33 804.75(1+0.0375)^2
S=RM36 387.64
5. Alice invests RM30,000 in an account for 5 years. The investment account
pays 6% compounded half-yearly for the first 3 years and 5.5%
compounded half-yearly for the rest of the period.
a. What is the maturity value of her investment?
b. Find the interest earned from this investment.
First 3 years is 6% 2 times The following 2 years is 5.5% 2 times
i=k/m n=mt i=k/m n=mt
i=0.06/2 n=2(3) i=0.055/2 n=2(2)
i=0.03 n=6 i=0.0275 n=4

S=P(1+i)^n
S=RM30 000(1+0.03)^6
S=RM35 821.56

S=P(1+i)^n
S=RM35 821.56(1+0.0275)^4
S=RM39 927.47

I=S-P
I=RM39 927.47-RM30 000
I=RM9 927.47

6. Aiman deposited RM3,500 in a saving account at 6% compounded

quarterly. Two years after the deposit, the bank changed the interest rate
of 7.5% compounded semi-annually. Find the balance in his account:
a. At the end of two years
b. At the end of five years

First 2 years is 6% 4 times The following 3 years is 7.5% 2 times

i=k/m n=mt i=k/m n=mt
i=0.06/4 n=4(2) i=0.075/2 n=2(3)
i=0.015 n=8 i=0.0375 n=6

S=P(1+i)^n
S=RM3 500(1+0.015)^8
S=RM3 942.72

S=P(1+i)^n
S=RM3 942.72(1+0.0375)^6
S=RM4 917.28
7. Qaira deposited RM1,000 in a saving account at 3% compounded
monthly. Find the number of months required if Qaira wanted the amount
in the account to become RM2,000.
i=k/m n=mt
i=0.03/12 n=mt
i=0.0025

S=RM1000(1+0.0025)^n

S=P(1+i)^n
RM2000=RM1000(1+0.0025)^n
RM2=1.0025^n
log 2=n(log 1.0025)
n=277.60 months

8. Five years ago, Fauzan invested RM17,000 into his account at k%

compounded quarterly. Now the account balance has accumulated to
RM21,262.76.
a. Find the interest rate k% compounded quarterly
b. Calculate the compounded amount if the investment is extended
for another two years.

S=RM21 262.76
P=RM17 000
k=?
m=4
t=5

n=mt
n=4(5)
n=20

S=P(1+i)^n
RM21 262.76= RM17 000(1+i)^20
20√RM1.250750588=1+i
i=0.01125

i=k/m
0.01125=k/4
k=0.045
k=4.5%

n=mt S=P(1+i)^n
n=4(2) S=RM21 262.76(1+0.01125)^8
n=8 S=RM23 253.47