#### 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