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1.4 Financial applications of geometric sequences and seriesIB Maths: Applications and Interpretation HL: Flashcards

What these 13 flashcards ask

  • Compound interest formula?
  • What do r, k and n mean in the formula?
  • What is k for quarterly compounding?
  • What rate per period for 3.6% nominal, compounded quarterly?
  • Depreciation formula for r\% a year?
  • What multiplier gives a 12% annual depreciation?
  • What is the real value of an amount?
  • Which sequence type does simple interest give?
  • In the finance solver, what are P/Y and C/Y for monthly compounding?
  • What sign does PV have for money you invest?
  • What accuracy should money answers have?
  • Does more frequent compounding give more or less interest?
  • Real value less than the amount invested means what?

Exam questions on 1.4 Financial applications of geometric sequences and series

  1. Mia invests 5000 EUR in an account that pays 3% interest per year, compounded annually.
    Find the least number of complete years for the investment to exceed 7000 EUR.2 marks
  2. A car costs 24 000 EUR when new. Its value depreciates by 12% each year.
    Find the total fall in the value of the car over the first 5 years, as a percentage of its price when new. Give your answer to 3 significant figures.2 marks
  3. Karim deposits 8000 AED in a bank account that pays a nominal annual interest rate of 2.4%, compounded monthly. The average rate of inflation is 1.8% per year. Use your GDC finance application where helpful.
    Find the value of the account after 6 years, to the nearest cent.3 marks
See the full worksheet

Written by the Exaim team, led by Shaun Daswani (Head of Upper Secondary, Improve ME Institute; MSc Financial Mathematics, Imperial College London; BSc, UCL) and Jason Daswani (operational lead, Improve ME Institute; LSE).