Finance · Guided Practice
Interest with Varying Time Units
5 questions with answers and video solutions. Try each one before revealing the answer.
1
is deposited in an account with an effective rate of interest of per month.
Calculate the value of the account after months.
Give your answer to the nearest penny.
Calculate the value of the account after months.
Give your answer to the nearest penny.
Video solution coming soon
Answer
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2
A loan of is charged an effective rate of interest of per quarter.
No repayments are made.
Calculate the amount owed after years.
Give your answer to the nearest penny.
No repayments are made.
Calculate the amount owed after years.
Give your answer to the nearest penny.
Video solution coming soon
Answer
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3
is invested in a bond with an effective rate of interest of per half-year.
Calculate the value of the bond after years.
Give your answer to the nearest penny.
Calculate the value of the bond after years.
Give your answer to the nearest penny.
Video solution coming soon
Answer
Video solution coming soon
4
is deposited in an account with an effective rate of interest of per month.
Calculate the value of the account after months.
Give your answer to the nearest penny.
Calculate the value of the account after months.
Give your answer to the nearest penny.
Video solution coming soon
Answer
Video solution coming soon
5
2024 Q1
(1, 2)3 Marks
Bailey takes out a loan for £4000 with an annual effective rate of interest of 29.9%.
(a) Calculate the monthly effective rate of interest.
Bailey makes level monthly repayments of £250 at the end of each month.
(b) Complete the following loan schedule for Bailey's loan to show the loan outstanding at the end of month 2.
| Time (months) |
Repayment (£) |
Interest content of repayment (£) | Capital content of repayment (£) | Loan outstanding (£) |
|---|---|---|---|---|
| 0 | 4000.00 | |||
| 1 | 250.00 | |||
| 2 | 250.00 |
Answer
(a) 2.20...%
(b) Month 1: Interest £88.16, Capital £161.84, Loan outstanding £3838.16.
Month 2: Interest £84.59, Capital £165.41, Loan outstanding £3672.75.