Financial Mathematics Question Preview (ID: 47368)


The Test Is Based On Study Area 3. TEACHERS: click here for quick copy question ID numbers.

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

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) 12.1%
b) 11.6%
c) 8.4%
d) 6.3%

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) $1560
b) $6250
c) $1250
d) $6370

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) $166 700
d) $20 800

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) 6%
c) 4%
d) 8%

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) $200 and $220
b) $120 and $140
c) $140 and $160
d) $180 and $200

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) 15 years
b) 14 years
c) 12.75 years
d) 12.5 years

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) 100
b) 110
c) 600
d) 500

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) $27 000
b) $5000
c) $5100
d) $9000

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) $135
b) $145
c) $163
d) $170

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) 2 years 87 days
c) 3585 days
d) 9 years 301 days

After 4.5 years $1200 has grown to $1750 in an account where interest is compounded monthly. The annual interest rate is:
a) 7.0%
b) 0.7%
c) 8.4%
d) 3.2%

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

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) $6181.40
b) $4871.71
c) $6136.50
d) $15 561.27

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) 3%
b) 4.5%
c) 2%
d) 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) $255
c) $2550
d) $233.75

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) $415.63
b) $400
c) $65.63
d) $131.25

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%
b) 4.5%
c) 3.75%
d) 5%

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) $86.40
b) $236.80
c) $28.80
d) $446.40

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) $62.50
b) $0
c) $1200
d) $1137.50

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