Question 1
14 marks
Compound interest, savings and an arithmetic sequence
- Number and algebra
(a)
3 marks
- Monthly compounding for three years means periods at each.
- Use the finance solver or the compound interest formula, and give the answer to 2 d.p. as the paper asks.
Mentor tip
Money answers to 2 d.p. here: on its own is not in the form asked for.
(b)
3 marks
- The balance from (a) becomes the new present value.
- Add the monthly payment of for months, with the same rate and monthly compounding.
Mentor tip
Give and the same sign: both are money going into the account. Mixed signs make the solver treat the payments as withdrawals.
(c)
5 marks
(i) The costs drop by each year, so . Write and tidy it into the form .
(ii) Substitute .
(iii) Give one real weakness of a straight-line model for car prices.
Mentor tip
For (iii), say why the formula fails, not just that cars differ. Other good points: it only works for whole-number ages, and real prices usually fall faster at first rather than linearly.
(d)
3 marks
- Younger cars cost more, so look for the smallest age whose price fits within .
- Solve and round up to the next whole number.
- Subtract that car's price from the balance.
Mentor tip
Rounding down to gives a car she cannot afford. Always check the two neighbouring whole numbers.

