#### Interest - simple and compound

1.
Use the formulae for simple interest to calculate the value of each letter :
Number
Capital
Interest rate
Time
Interest
Amount
R
%
years
R
R
1.1
31 450
3,5
5
a
b
1.2
110 600
12
3
c
d
1.3
1 250
5,5
2
e
f
1.4
14 800
6
7
g
h
1.5
12 500
25,2
5
k
m
1.6
21 400
9
3
n
p
2.
Calculate the amount that is paid out and the interest on the investment in each of the following cases :
Number
Capitaal
Interest rate
Time
When compounded
Interest
Amount
R
%
years
R
paid out
2.1
13 250
4
3
annually
a
b
2.2
65 000
8
4
annually
c
d
2.3
116 000
12,5
6
annually
e
f
2.4
12 800
22
3
quaterly
g
h
2.5
60 000
8,5
4,5
monthly
k
m
2.6
28 400 000
7,5
2,5
semi-annually
n
p
2.7
82 000
20
3
quarterly
q
r
2.8
1 537 000
15
1,5
monthly
s
t
2.9
180 000
18
3,5
monthly
u
v
2.10
2 500 600
8
4
semi-annually
w
x
3.
You want to buy furniture and pay cash. Thus you want to borrow R18 000,00.
The bank offers two options:
Option I. Pay the loan over 18 months at a rate of 8,5% and the interest
is compounded monthly.
Option II : Pay the loan over 30 months at a rate of 10% and the interest is
compounded quarterly.
Which option is the cheaper? Show all your calculations.
4.
The accompanying graph represents the value
of an investment at rates of 6% and 12% p.a.
and the interest is compoundded monthly.
4.1
What is the value of the investment? Explain
4.2
Estimate the interest received on each
investment after 12 months.
4.3
Is the interest earned at 12% double that
at 6% ? Does your answer correspond
to the values at 36 months?
4.4
After how many monthe will the investment
at 12% have a value of more that R110?
Give an estimate and then test your answer.