Apps. and Interpretation for IBDP Maths Ebook 1 | Page 84

Your Practice Set – Applications and Interpretation for IBDP Mathematics
23
Paper 1 – Compound Interest
Example
For this question, give all the answers correct to the nearest USD.
24000 USD is invested for 5 years at a nominal annual interest rate of 6%, compounded
yearly.
(a)
(b)
Find the value of P , the amount of money after 5 years.
[3]
An amount of money Q is invested for 5 years at a nominal annual interest rate of
6%, compounded half-yearly. The amount of money after 5 years is P . Find the
value of Q .
[3]
Solution
(a)
(b)
5
� 6 �
P �24000�1�
�
� 100 �
(M1)(A1) for substitution
P � 32117.41386
P � 32117 USD A1 N3
By TVM Solver :
N�
5
I% � 6
PV ��24000
PMT � 0
(M1)(A1) for correct values
FV � ?
P / Y �1
C / Y �1
PMT : END
P � 32117 USD A1 N3
[3]
(2)(5)
6
Q �
�1�
�
� �32117.41386
� (100)(2) �
10
Q(1.03) � 32117.41386
Q � 23898.37222
Q � 23898 USD A1 N3
(M1)(A1) for correct equation
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