IM12 Bk2 Ch1ChallengeWorksheet

Challenge worksheet
Chapter 1 Investments, depreciation and loans
1A Comparing simple and compound interest

investments
1 Todd was the lucky winner of a statewide raffle. He was given two options for his first-
place prize:
Option A: A lump sum of $50 000
Option B: $40 000 invested into a special high-interest account paying 9.9% p.a.
interest compounded annually for 7 years
a Outside of the competition, the highest compound interest rate Todd can find is
6.36% p.a. interest compounded annually. If Todd invests the $50 000 from option
A in this account, how much will he have in his account after 7 years?
Year Balance at start of Interest Balance at end of

year year
© Oxford University Press 2019 1

Insight Mathematics Standard 2 Year 12 Teacher obook/assess ISBN 9780190312183
Permission has been granted for this page to be photocopied within the purchasing institution only.
b If Todd chooses option B, how much will he have in his account after 7 years?
Year Balance at start of Interest Balance at end of

year year
c Even though option B produces a greater return after 7 years, Todd decides to take
option A and invests the $50 000 in the account paying 6.36% p.a.
Explain why you think Todd may have decided to choose this option.

1B The compound interest formula
2 Kristina is saving for a deposit to purchase her first property. She currently has $22 500
in savings, and would like to have a $40 000 deposit saved before she looks for an
apartment.
a If Kristina puts the $27 000 in a savings account paying 5.55% p.a. interest
compounding monthly, how short of the $40 000 would she be after 4 years?
b Use trial and error to determine how many months it would take Kristina’s $27 000
to reach $40 000 using this savings account.

c How much would Kristina need to put into the savings account now for the balance
to reach $40 000 in 4 years?
d If Kristina invested her $27 000 into the savings account now and added her work
bonus of $6000 in 2 years’ time into the savings account, would she reach $40 000
after 4 years?

1C Using a compounded value table
3 Jaydon wants to expand the compounded value interest table given in his textbook to
include an extra couple of columns. Help Jaydon to complete these columns by
performing appropriate calculations.
Interest rate per time period

Time period 12% 20%

1D Inflation and appreciated value
4 House prices in Sydney rose considerably between 2012 and 2017. The following table
details the percentage change in the Residential Property Price Index each year (from
June to June).
Year % change from corresponding quarter of

previous year
2013 7.2
2014 15.9
2015 18.9
2016 3.6
2017 13.8
Source: Australian Bureau of Statistics
a How much would you expect a Sydney house which sold for $800 000 in June
2012 to be worth in June 2017? Give your answer to the nearest $1000.
b What is the average annual percentage increase over the 5-year period? Give your
answer correct to one decimal place.

c The following table details the year-end percentage change in the consumer price
index over the same period.
Year % change in consumer price index

2013 2.4
2014 3.0
2015 1.5
2016 1.0
2017 1.9
Source: Reserve Bank of Australia
If house prices only rose in line with the consumer price index, by how much less
would the $800 000 have risen in price over the 5-year period than it actually did?
Give your answer to the nearest $1000.
d From June 2017 to June 2018 the Sydney Residential Property Price Index fell by
3.9%. By how much did the value of the property from part a fall over this year?
Give your answer to the nearest $1000.

1E Shares
5 Ziggy purchased 1500 shares with a market value of $2.35. The brokerage fee was
2.5%.
a 6 months later Ziggy sold these shares when they had a market value of $3.22.
The transaction had a brokerage fee of 2.5%. What was Ziggy’s gain from the
investment?
b Ziggy reinvested all of the money from the sale into another stock with a market
value of $0.56. The brokerage fee for this transaction was 2.2%. How many shares
of this stock did Ziggy purchase?

c The market price of this new stock soared to $1.38 within 18 months, at which time
Ziggy sold his holdings. The transaction carried a $43 brokerage fee. What
percentage, to one decimal place, was Ziggy’s return on his initial investment?

1F Declining-balance method of depreciation
6 Sharon purchased a new car for $67 990. In the first year the value of the car
depreciated by 30%.
a Calculate the value of Sharon’s car after one year.
b The depreciation rate of Sharon’s car fell to 15% in the second year, and 12% in
the third year. What was the value of Sharon’s car after three years? Give your
answer to the nearest dollar.
c What was the annual average rate of depreciation of Sharon’s car over the 3-year
period? Give your answer to the nearest whole number.

1G Reducing-balance loans
7 Annie and Anthony took out a $25 000 loan to help build an extension to their house.
The interest on the loan is 13.8% p.a. monthly reducible, there is a loan establishment
fee of $440 and there is a monthly account-keeping fee of $15 per month.
a How much would Annie and Anthony need to pay back in the first month for the
balance at the end of the month to be exactly $25 000?
b If Annie and Anthony paid back this amount every month, what would the balance
of their account be after 6 months?

1H Credit cards
8 Celia’s credit card has an annual percentage rate of 20.4% and an interest-free period
of 55 days. In December, Celia’s credit card statement was as follows.
December statement
Date Details Amount ($)
1 Dec Opening balance 0
4 Dec Purchase 75
9 Dec Purchase 130
18 Dec Purchase 99
21 Dec Purchase 112
22 Dec Purchase 200
a When is the due date for Celia’s purchases in December?

b The minimum payment on Celia’s credit card is the greater of $10 or 3% of the
closing balance. What is the minimum payment due on Celia’s December
statement?
c Celia made the minimum payment on 10 January, and made no other payments or
purchases in January. When the 55-day interest-free period passes, interest on
these purchases is charged from the day of their purchase. What is Celia’s credit
card balance at the end of January?


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Challenge worksheet

Chapter 1 Investments, depreciation and loans

1A Comparing simple and compound interest

Option A: A lump sum of $50 000

Year Balance at start of Interest Balance at end of

© Oxford University Press 2019 1

Year Balance at start of Interest Balance at end of

© Oxford University Press 2019 2

© Oxford University Press 2019 3

© Oxford University Press 2019 4

Interest rate per time period

© Oxford University Press 2019 5

Year % change from corresponding quarter of

© Oxford University Press 2019 7

Year % change in consumer price index

© Oxford University Press 2019 8

© Oxford University Press 2019 9

© Oxford University Press 2019 10

a Calculate the value of Sharon’s car after one year.

© Oxford University Press 2019 11

© Oxford University Press 2019 12

a When is the due date for Celia’s purchases in December?

© Oxford University Press 2019 13

© Oxford University Press 2019 14

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