Question 1
19 marks
Savings and a loan: compound interest and amortisation
- Number and algebra
(a)
3 marks
Two years is 8 quarters, each at interest.
(b)
4 marks
- Solve for the number of quarters , on the calculator or by logs.
- Interest is only added at the end of each quarter, so convert to months.
(c)
1 mark
The deposit is 25% of 200 000, so the loan is the remaining 75%.
(d)
5 marks
(i) Over 10 years there are 120 payments of 1700, so the interest is what Daisy pays beyond the loan.
(ii) Use the calculator's finance solver: , , , , payments and compounding 12 per year.
(e)
3 marks
After 5 years she has made 60 payments. Use the same solver with , , , , and read off the future value, which is the balance still owed.
(f)
3 marks
Without the early payoff she would have paid . With it, she pays 60 payments plus the final amount.

