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  • gr10t3 Financial Mathematics Compound Interest Memo

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    The document contains 5 problems involving calculations of compound interest to determine future amounts (A) given principles (P), interest rates (i), and time periods (n). It shows the calculations for finding A, P, i, or n given values of the other 3 variables. The conclusion is that Bank Alpha, which pays an interest rate of 12.6% over 3 years, is the best investment for Sara compared to Bank Beta which pays 8.59% over 4 years.

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    The document contains 5 problems involving calculations of compound interest to determine future amounts (A) given principles (P), interest rates (i), and time periods (n). It shows the calculations for finding A, P, i, or n given values of the other 3 variables. The conclusion is that Bank Alpha, which pays an interest rate of 12.6% over 3 years, is the best investment for Sara compared to Bank Beta which pays 8.59% over 4 years.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    12 views2 pages

    gr10t3 Financial Mathematics Compound Interest Memo

    Uploaded by

    Siva
    The document contains 5 problems involving calculations of compound interest to determine future amounts (A) given principles (P), interest rates (i), and time periods (n). It shows the calculations for finding A, P, i, or n given values of the other 3 variables. The conclusion is that Bank Alpha, which pays an interest rate of 12.6% over 3 years, is the best investment for Sara compared to Bank Beta which pays 8.59% over 4 years.

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    of 2

    Memorandum

    Gr 10 Date: Time: 1 HR
    CAPS Reference
    Finance & Growth
    Topic Compound Interest

    2.1 𝐴𝐴 = ? 𝑃𝑃 = 14 700
    𝑛𝑛 12,5
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖) 𝑖𝑖 = 100 𝑛𝑛 = 8
    12,5 8
    𝐴𝐴 = 14 700 � 1 + �
    100
    𝐴𝐴 = 𝑅𝑅 37 717, 03

    2.2 𝐴𝐴 = 23 691,30 𝑃𝑃 =?
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖)𝑛𝑛 10
    𝑖𝑖 = 100 𝑛𝑛 = 3
    10 3
    23 691,30 = 𝑃𝑃 � 1 + �
    100
    23 691,30
    = 𝑃𝑃
    10 3
    � 1 + 100�
    𝑃𝑃 = 𝑅𝑅 17 799, 62

    2.3 𝐴𝐴 = 22 174,44 𝑃𝑃 = 13 600


    𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 = 8 574,44 + 13 600 = 𝑅𝑅22 174,44 𝑖𝑖 = ? 𝑛𝑛 = 4
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖)𝑛𝑛
    22 174,44 = 13 600 ( 1 + 𝑖𝑖)4
    22 174,44
    = ( 1 + 𝑖𝑖)4
    13 600
    1,63047352941 = ( 1 + 𝑖𝑖)4
    4
    �1,63047352941 = 1 + 𝑖𝑖
    1,12999 = 1 + 𝑖𝑖
    1,12999 − 1 = 𝑖𝑖
    0,12999 = 𝑖𝑖
    𝑖𝑖 = 13%

    2.4 𝐴𝐴 = ? 𝑃𝑃 = 35 000
    𝑛𝑛 11,8
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖) 𝑖𝑖 = 100 𝑛𝑛 = 5
    11,8 5
    𝐴𝐴 = 35 000 � 1 + �
    100
    𝐴𝐴 = 𝑅𝑅 61 133, 19
    2.5 𝐴𝐴 = ? 𝑃𝑃 = 150 000
    Bank Alpha 12,6
    𝑖𝑖 = 100 𝑛𝑛 = 3
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖)𝑛𝑛
    12,6 3
    𝐴𝐴 = 150 000 � 1 + �
    100
    𝐴𝐴 = 𝑅𝑅 214 144, 26
    𝐴𝐴 = ? 𝑃𝑃 = 150 000
    Bank Beta 8,59
    𝑖𝑖 = 100 𝑛𝑛 = 4
    𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖)𝑛𝑛
    8,59 4
    𝐴𝐴 = 150 000 � 1 + �
    100
    𝐴𝐴 = 𝑅𝑅 208 569,40

    Bank Alpha is the best investment for Sara.

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