b:rrker2012 -2u

Ashley has just retired with $1 000 000 in her bank account. This account attracts
interest at a rate of 5% per annum compounded annually.

She intends to withdraw money in equal amounts at the end of each year, and wants
the money in her account to last for exactly 20 years.

Let A,, be the amount of money in her account after n years.

(i) Write down an expression for the amount left after two withdrawals. 1

(ii) Calculate the amount of each withdrawal. 3

(iii) After her tenth withdrawal, the bank changes its interest rate to 3% p.a. on
the balance remaining in her account. Interest is still compounded annually.

Ashley changes the amount of her withdrawals so that they last the
remaining I 0 years and are equal in value over these I 0 years.

What will be the new amount of each withdrawal in these last 10 years? 3
H urlstone 2017 2 U T ri2ls

Kylo invests $P at 7% per annum compounded annually.

He plans to withdraw $5000 at the end of each year for eight years to cover
university fees .

(i) Write down an expression for the amount $A1 remaining in the account
1
following the withdrawal of the first $5000.

(ii) Find an expression for the amount $A3 remaining in the account after
2
the third withdrawal.

(iii) How much does Kylo need to invest if the account balance is to be $0 2
at the end of the eight years?
B2ul kh.2m H ills 2013 2 U T ri2ls

Kelvin borrows $200 000 from his bank. Interest is compounded monthly at 0.425% per
month. An is the amount owed after n payments, $M is the amount of the monthly
instalments and the loan is repaid after n months.
(i) Show that A 2 = 200 000(1.00425) 2 - M(l.00425) - M 1

(ii) Show that the monthly repayment, $M is given by

3
200 000(1.00425)1t(0.00425)
M = 1.00425n - 1

(iii) Find the amount of the monthly instalments if Kelvin agrees to repay the loan 1
over 30 years.

(iv) How much will Kelvin pay in total after 30 years? 1

(v) If Kelvin instead decided to pay monthly instalment of$1331 from the beginning 2
of the loan, how long will he take to repay the loan?