Asch2m 2012 2 U T ri.

als

A company borrows $200 000 from a bank to be paid back in 20 equal annual
instalments. The bank charges 6% p.a. interest compounded half-yearly. Let
$A,, be the amount owing after n years and $ Y be the value of each yearly
instalment.

(i) Show that A, = 200000(1 .03)2 - Y. [11

(ii) Find an expression for ~o . [2]

(iii) Find the value of each yearly instalment. (2)

B2ul kh2m Hills 2007 2 U T ri.als

Alice is retiring tomorrow and her Super Fund contains $450,000. The fund is
earning 15% p.a. compound interest, compounded monthly. Alice wishes to
withdraw a regular amount of $6000 per month to cover her expenses.

i.) Show that after 1 month she will have an amount A in her account 1
where A, = 450000xl.0125 - 6000

ii.) Find an expression for the amount remaining after n months 1

iii.) How many years will the money last? 2

iv.) If she wishes to withdraw $6000 per month from her account for 1
30 years, use your calculator to approximate the required interest rate.
2017 B2ulkh2m H ills HS 2U

Karina borrows $80 000 to start a business. She plans to repay the loan in equal monthly
instalments of $Mat 0.5% per month reducible interest. Interest is calculated and charged just
before each repayment.

Let An= amount owing after n repayments (in dollars)

(i) Show that the amount owing after 3 repayments is

A3 = 80000(1.005) 3 - M(l.005 2 + 1.005 + 1) 2

(ii) Show that

An = 1.005ncsoooo - ZOOM) + zooM 2

(iii) If she wishes to repay the loan in 10 years, calculate the amount of each instalment. 2

(iv) If she can only repay $700 per month, how long will it take her to repay the loan?
Answer correct to the nearest year. 2