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Finance · Guided Practice

Accumulation with Irregular Payments

5 questions with answers and video solutions. Try each one before revealing the answer.

1
An account has an effective rate of interest of 2%\displaystyle 2\% per year.
£3000\displaystyle \pounds 3000 is deposited at the start of year 1\displaystyle 1.
At the start of year 2\displaystyle 2 a further £1000\displaystyle \pounds 1000 is deposited.
Calculate the value of the account at the end of year 2\displaystyle 2.
Give your answer to the nearest penny.
Video solution coming soon
2
An account has an effective rate of interest of 3%\displaystyle 3\% per year.
£5000\displaystyle \pounds 5000 is deposited at the start of year 1\displaystyle 1.
At the start of year 2\displaystyle 2, £800\displaystyle \pounds 800 is withdrawn.
Calculate the value of the account at the end of year 2\displaystyle 2.
Give your answer to the nearest penny.
Video solution coming soon
3
A loan of £10000\displaystyle \pounds 10000 is charged an effective rate of interest of 4%\displaystyle 4\% per year.
At the end of year 1\displaystyle 1 a repayment of £3000\displaystyle \pounds 3000 is made.
Calculate the amount owed at the end of year 2\displaystyle 2.
Give your answer to the nearest penny.
Video solution coming soon
4
An account has an effective rate of interest of 2.5%\displaystyle 2.5\% per year.
£2000\displaystyle \pounds 2000 is deposited at the start of year 1\displaystyle 1 and £2000\displaystyle \pounds 2000 at the start of year 2\displaystyle 2.
At the start of year 3\displaystyle 3, £1500\displaystyle \pounds 1500 is withdrawn.
Calculate the value of the account at the end of year 3\displaystyle 3.
Give your answer to the nearest penny.
Video solution coming soon
5
2025 Q8
(5, 1, 4)10 Marks

You must refer to the spreadsheet file 'Q8 Finance.xlsx' when answering this question.
You must complete parts (a) and (c) using the spreadsheet file.
Part (b) must be completed in the answer space provided.

Martin is buying a car for £7500. The garage offered Martin the finance package below: 20% deposit, 35 level monthly repayments of £216.77, final monthly repayment £216.13.

(a) Complete the loan schedule to determine the annual effective rate of interest that is being charged for the finance package.

Car insurance is a legal requirement for cars driven on UK roads.

(b) Explain the purpose of car insurance.

(c) Martin has been saving for the deposit and car insurance. He opened a savings account with an initial deposit of £500 on 1 August 2023. He made regular monthly payments of £250 into the account on the first day of each month from 1 September 2023. Effective rates: 0.24% per month (1 Aug 2023 to 30 Nov 2023), 3.1% per year (From 1 Dec 2023).
Calculate the balance in Martin's savings account immediately before he makes his payment on 1 August 2024.

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