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1.7 Amortization and annuitiesIB Maths: Applications and Interpretation SL: Mind map

What this mind map covers

  • GDC finance
  • Loans
  • Annuities
  • Questions
  • Exam habits

Exam questions on 1.7 Amortization and annuities

  1. Alicia takes out a loan of 12 000 USD to buy a car. Interest is charged at a nominal annual rate of 6%, compounded monthly. She repays the loan with equal payments at the end of each month for 4 years.
    Calculate the total interest Alicia pays over the 4 years.2 marks
  2. Ben deposits 200 EUR at the end of each month into an account that pays a nominal annual interest rate of 3.6%, compounded monthly. The account starts with a zero balance.
    Use your GDC to find the least number of months Ben must keep depositing so that the balance first exceeds 15 000 EUR.2 marks
  3. A bank lends 150 000 AED to buy a flat. Interest is charged at a nominal annual rate of 4.5%, compounded monthly. The loan is repaid with equal payments at the end of each month over 20 years.
    Use your GDC to find the monthly repayment.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).