1. 1
   Karim invests 5000 USD for 3 years at a nominal annual interest rate of 6%. He makes no further deposits or withdrawals. A calculator may be used in this question.

   (a)

   The interest is compounded annually. Find the value of the investment after 3 years.

   [1 mark]

   • A6312.38 USD
   • B5900.00 USD
   • C5955.08 USD
   • D15 900.00 USD

   (b)

   Which expression gives the value of the investment after 3 years if the interest is compounded monthly?

   [1 mark]

   • A$5000\left(1+\frac{0.06}{12}\right)^{36}$
   • B$5000\left(1+\frac{0.06}{12}\right)^{3}$
   • C$5000(1+0.06)^{36}$
   • D$5000\left(1+\frac{6}{12}\right)^{36}$

   (c)

   Find the value of the investment after 3 years if the interest is compounded monthly. Give your answer correct to the nearest cent.

   [2 marks]

   Total for question 1: 4 marks

2. 2
   A car is bought new for 32 000 USD. Its value depreciates by 15% of its value at the start of each year. A calculator may be used in this question.

   (a)

   Find the value of the car after 1 year.

   [1 mark]

   • A17 000 USD
   • B36 800 USD
   • C4800 USD
   • D27 200 USD

   (b)

   Which expression gives the value of the car, in USD, after $n$ years?

   [1 mark]

   • A$32\,000(0.15)^{n}$
   • B$32\,000(0.85)^{n}$
   • C$32\,000(1.15)^{n}$
   • D$32\,000(1-0.15n)$

   (c)

   Find the value of the car after 5 years, correct to the nearest dollar.

   [2 marks]

   Total for question 2: 4 marks

3. 3
   Sofia invests 20 000 EUR in an account paying 4.5% interest per year, compounded annually, for 6 years. During this time the annual inflation rate is 2.8%. A calculator may be used in this question.

   (a)

   Find the value of Sofia's investment after 6 years and the interest earned. Give your answers correct to two decimal places.

   [3 marks]

   (b)

   By using a real interest rate equal to the interest rate minus the inflation rate, find the real value of the investment after 6 years. Hence find the real increase in value as a percentage of the amount invested, and comment on your answer.

   [4 marks]

   Total for question 3: 7 marks

4. 4
   Nadia has 12 000 GBP to invest for 10 years. Bank A offers 5.2% per year compounded annually. Bank B offers a nominal rate of 5.1% per year compounded monthly. A calculator may be used in this question.

   (a)

   Find the value of Nadia's investment after 10 years in each bank, giving your answers to the nearest penny. Hence determine which bank she should choose, and explain why this bank gives the better return despite its lower interest rate.

   [6 marks]

   (b)

   (i) Find the least number of complete years for which Nadia must leave her money in Bank B for it to at least double.
   (ii) Bank C offers interest compounded annually. Find the annual interest rate Bank C must offer for Nadia's 12 000 GBP to double in exactly 10 years. Give your answer as a percentage correct to 3 significant figures.

   [6 marks]

   Total for question 4: 12 marks

End of questions