Cherrybrook T ech 201.

5 2 U Tri~s

Raakhi's grandparents have set up a fund with a single investment of

$400,000 to provide financial support for her. She is granted an annual
payment of $25,000 from this fund at the end of each year. The fund accrues
interest at a rate of 5% per annum compounded annually.

(i) Calculate the balance in the fund at the end of the first year. 1

(ii) Let $A,, be the balance of the fund at the end of n years (after Raakhi
2
receives her payment). Show that A,, = 500, 000- l 00, 000 ( l.05)".

(iii) If this fund began at the beginning of2000, in what year will the fund
run out of money? 3
CS.SA 2011 l\<f.2thenutics 6200-1 P2per

The University of Gauss offers scholarships to young M athematicians.

The fund is set up with a single investment of $70 000. The fund earns
interest at 8% p.a. compounded yearly. A scholarship, valued at $10 000, is
awarded each year by the university. The first scholarship is awarded 1 year
after the investment is made.

Let F,, be the value of the fund after n years.

(i) Show that the value of the fund after 3 years is 2

F, =70 000(1.08)3 - 10 000(1.08) 2 -10 000(1.08) - 10 000.

(ii) Deduce that F,, = 125 000 - 55 000(1.08)". 2

(iii) Calculate the number of years the full value of the scholarship can be 3
awarded by the university.
Fort St 2007 2 U Tri~s

Bronwyn borrows $500 000 from a finance company to buy a house.

She pays interest at 6% per annum , calculated quarterly on the

. .
balance still owing. The loan is to be repaid at the end of 20 years with

equal quarterly repayments of $P.

Let An equal the amount owing after the n'h repayment.

i) Show that after the first quarterly repayment of $P Bronwyn owes

an amount equivalent to A1 =$507 500 - $P . 1

ii) Find an expression for the amount still owing after 3 repayments of

$P. 1

iii) Find the value of $P to the nearest cent. 3