Transum Software

Exam-Style Question on Finance

A mathematics exam-style question with a worked solution that can be revealed gradually

List Of Questions Exam-Style Question More Finance Questions More on this Topic

Question id: 571. This question is similar to one that appeared on an IB AA Standard paper in 2021. The use of a calculator is allowed.

Two friends Arthur and Babette, each set themselves a target of saving £12000. They each have £6800 to invest.

(a) Arthur invests his £6800 in an account that offers an interest rate of 8% per annum compounded annually. Find the value of Arthur's investment after 6 years.

(b) Determine the number of complete years required for Arthur's investment to reach the target.

Babette invests her £6800 in an account that offers an interest rate of \(r\)% per annum compounded monthly, where \(r\) is set to two decimal places.

(c) Find the minimum value of \(r\) needed for Babette to reach the target after 15 years.

A third friend Callum wants to reach a £9000 target. He puts £4000 under his mattress where it does not earn any interest. His system is to add more money to his savings regularly. Each year he will add half the amount added in the previous year.

(d) Show that Callum will never reach the target if during the first year he adds £2000.

(e) Find the amount Callum needs to add during the first year in order to reach the target after 8 years.

The worked solutions to these exam-style questions are only available to those who have a Transum Subscription.

Subscribers can drag down the panel to reveal the solution line by line. This is a very helpful strategy for the student who does not know how to do the question but given a clue, a peep at the beginnings of a method, they may be able to make progress themselves.

This could be a great resource for a teacher using a projector or for a parent helping their child work through the solution to this question. The worked solutions also contain screen shots (where needed) of the step by step calculator procedures.

A subscription also opens up the answers to all of the other online exercises, puzzles and lesson starters on Transum Mathematics and provides an ad-free browsing experience.

Example

Dent

Drag this panel down to reveal the solution

If you need more practice try the self-checking interactive exercises called Interest.

The exam-style questions appearing on this site are based on those set in previous examinations (or sample assessment papers for future examinations) by the major examination boards. The wording, diagrams and figures used in these questions have been changed from the originals so that students can have fresh, relevant problem solving practice even if they have previously worked through the related exam paper.

The solutions to the questions on this website are only available to those who have a Transum Subscription.

 

Exam-Style Questions Main Page

 

Search for exam-style questions containing a particular word or phrase:

To search the entire Transum website use the search box in the grey area below.

Comments:

Do you have any comments about these exam-style questions? It is always useful to receive feedback and helps make this free resource even more useful for those learning Mathematics anywhere in the world. Click here to enter your comments.

Apple

©1997-2022 WWW.TRANSUM.ORG

©1997 - 2022 Transum Mathematics :: For more exam-style questions and worked solutions go to Transum.org/Maths/Exam/