Financial Mathematics 2
MATHEMATICS OF FINANCEYou should be able to:
1. solve problems involving depreciation.2. solve compound interest problems where the period of compounding is less than a year.
3. differentiate between nominal and effective interest rates.
4. solve compound interest problems in respect of fluctuating interest rates.
5. solve problems on compound growth and decay.
Formulae used
Simple Interest
Compound Interest
Simple interest
2. R11 300 is invested at 6% p. a simple interest. Calculate the future value after 12 years.
1. R700 is invested at 8, 2% p. a simple interest for 3 years. Calculate the interest earned.
1. Mr Khumalo buys a car from Fast Cars for R 75 000. He pays a deposit of R 8000 and agrees to pay the rest over 36 months on a hire purchase plan at 21% p.a.
What is his monthly installment?
Compound Growth and Decay
2. Determine the accumulated amount if R32 000 is invested at 15% p.a. compound interest for 3 years.
3. A photocopier costs R 54 000. Calculate the expected cost of a new photocopier in 3 years time, assuming an annual inflation rate of 10% p.a. over these years.
1. South Africa has an estimated growth rate of 2,3% p.a. If the present population is 46 543 276, determine the population of the country in 2010?