Bank loan of R600 000

QUESTION 3

Jake takes out a bank loan of R600 000 to pay for his new car. He repays the loan with monthly instalments of R9 000, starting one month after the granting of the loan. The interest rate is 13% per annum, compounded quarterly.

      3.1 Show that the effective interest rate is 12,86% p.a. compounded monthly. (3)

3.2 How many instalments of R9 000 must be paid? (5)

3.3 What will the final payment be? (5)

3.4 What did the car cost Jake in total by the time it is paid off? (2)

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QUESTION 4

4.1 Hein invests R12 500 for k years at a compound interest rate of 9% p.a. compounded quarterly. At the end of the k years his investment is worth R30 440. Calculate the

value of k. (4)

4.2 Matt bought a car for R500 000 on an agreement in which he will repay it in monthly instalments at the end of each month for 5 years. Interest is charged at 18% p.a. compounded monthly.

4.2.1 Calculate the annual effective interest rate of the loan. (3)

4.2.2 Calculate Matt’s monthly instalments. (4)

4.2.3 Matt decided to pay R12 700 each month as his repayment. Calculate the outstanding balance of the loan after 2 years.

(4)

4.2.4 At the end of the 2 years, the market value of Matt’s car had reduced to R304 200. Determine the annual interest rate of depreciation on the reducing (2) value.

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