1. From Study and Master Grade 12
Naledi opens a savings account, in which she plans to deposit R500 per month for a year. If interest is paid at 12% per annum, compounded monthly, how much will she have at the end of this time?
2. From Step Ahead Mathematics Grade 12.
Calculate the future value if R800 is invested into an account every six months for 7 years with interest being calculated at 8%p.a. compounded semi-annually.
3. From Classroom Mathematics Grade 12.
To replace a truck in eight years time, a business sets up a sinking fund, paying R1 800 into the fund each month. Payments start in one month’s time. How much money will have accumulated in the fund immediately after the last payment has been made at the end of the eight years? Interest of 9,4% p.a. is compounded monthly.
4. A young man decides to invest money each month into a pension fund, starting on his 30th birthday and ending on his 60th birthday. He wants to have R1,5 million on retirement. If the interest rate is 14% p.a., compounded monthly, what will be his monthly payments?
Present value annuities
Money is repaid by regular, equal payments in order to pay back a loan, together with the interest accrued. Interest is charged on the reducing balance.
Example
A house is bought for R260 000. The buyer pays R50 000 cash and secures a loan for the balance to be repaid monthly over a period of 20 years.
1. If interest is calculated at 19,5% p.a., compounded monthly, what will be the equal monthly payments?
2. What would be the payments if the loan were repaid over 10 years?
3. What would be the balance of the loan after 10 years, immediately after the 120th payment of the monthly amount calculated in (1)?
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