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Financial Mathematics
Test Description: The test is based on Study Area 3
Instructions: Answer all questions to get your test result.
1) Two banks pay simple interest on short-term deposits. Bank A pays 6% p.a. over 4 years and Bank B pays 6.5% p.a. for 3.5 years. The difference between the two banks’ final payout figure if $5000 was invested in each account is:
A
$1137.50
B
$0
C
$1200
D
$62.50
2) Clayton invested $360 in a bank for 3 years at 8% simple interest each year. At the end of the 3 years, the total amount he will receive is:
A
$28.80
B
$236.80
C
$86.40
D
$446.40
3) A loan of $5000 is taken over 5 years. The simple interest is calculated monthly. The interest bill on this loan is $1125. The simple interest rate per year on this loan is:
A
3.75%
B
4.5%
C
3%
D
5%
4) A loan of $10 000 is taken over 10 years. The total interest bill on this loan is $2000. The simple interest rate per year on this loan is:
A
5%
B
4.5%
C
3%
D
2%
5) A 6-year bond pays 8.5 % p.a. simple interest. If Rhonda buys a bond worth $500, the interest she would earn would be:
A
$250
B
$2550
C
$233.75
D
$255
6) Simple interest was calculated on a term deposit of 5 years at 3.75 % p.a. When Leigh calculated her total return on her investment principal of $350, her return was:
A
$131.25
B
$415.63
C
$400
D
$65.63
7) An investment of $4500 earns compound interest at a rate of 6.4% p.a. and is made for 5 years. The balance in the account at the end of the investment period, if interest is compounded quarterly, is:
A
$4871.71
B
$15 561.27
C
$6181.40
D
$6136.50
8) After 4.5 years $1200 has grown to $1750 in an account where interest is compounded monthly. The annual interest rate is:
A
3.2%
B
0.7%
C
8.4%
D
7.0%
9) A sum of $850 is invested at 8% p.a. compound interest, credited fortnightly. For the balance to grow to $1200 the investment should be left for a minimum of:
A
112 years
B
113 years
C
4 years 8 fortnights
D
4 years 9 fortnights
10) In an account which pays compound interest at 12% p.a., credited daily, an investment of $13 000 will accrue $4000 interest in:
A
2 years 86 days
B
3585 days
C
9 years 301 days
D
2 years 87 days
11) A loan of $14 000 is taken out over 4 years at 9.75% p.a. (debited fortnightly) on the outstanding balance. The fortnightly repayment needed to repay the loan in full, to the nearest dollar, is:
A
$170
B
$145
C
$135
D
$163
12) Rachel repaid a reducing balance loan of $22 000 in 5 years by quarterly repayments and with interest charged quarterly at 8.2% p.a. on the outstanding balance. The total amount of interest that she paid was closest to:
A
$5100
B
$5000
C
$9000
D
$27 000
13) The number of monthly repayments required to repay a $41 000 reducing balance loan in full, if the repayments are $588.39 and interest is debited monthly at 10.5% p.a., will be closest to:
A
500
B
600
C
100
D
110
14) A reducing balance loan of $56 000 is repaid by quarterly instalments of $1332.24 over 15 years at an interest rate of 5% p.a. (adjusted quarterly). If, instead, repayments of $1500/quarter were made throughout the loan, the term of the loan would
A
12.5 years
B
14 years
C
12.75 years
D
15 years
15) A reducing balance loan of $24 000 attracting interest at 6.5% p.a. can be repaid over 5 years by either quarterly repayments of $1415.18 or fortnightly repayments. The fortnightly repayment value is between:
A
$180 and $200
B
$140 and $160
C
$120 and $140
D
$200 and $220
16) A pearl necklace is purchased on hire-purchase for $225 deposit with equal monthly payments of $80 for 2 years. The cash price is $2000. The interest rate is:
A
3.5%
B
4%
C
8%
D
6%
17) A hire-purchase contract specifies that there are to be monthly payments for 2 years. The flat rate of interest is 6.3% p.a. The effective interest rate for this contract is closest to:
A
6.3%
B
11.6%
C
12.1%
D
8.4%
18) A wealthy businesswoman sets up a cancer research grant. She invests $125 000 into government bonds that offer 5% p.a. calculated annually. The annual grant would be:
A
$6370
B
$1560
C
$1250
D
$6250
19) A scholarship of $500 per term is provided for by a perpetuity invested in a fund offering 4.8% per annum, compounded quarterly. The amount that needs to be invested is closest to:
A
$10 400
B
$41 700
C
$20 800
D
$166 700
20) Jarrod saves $500 per month in an account that pays interest at a rate of 6% per annum, compounding monthly. If he makes regular monthly payments of $500 to the account, how much will he have in the account at the end of 10 years?
A
$81 939.67
B
$81 939.66
C
$82 000
D
$80 000
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