Apps. and Interpretation for IBDP Maths Ebook 1 | Page 90

Your Practice Set – Applications and Interpretation for IBDP Mathematics 8 � 3.454606 � �170000 �1� � � 100 � (A1) for substitution � 223073.2887 � $223000 A1 N2 By TVM Solver : N� 8 I% � 3.454606 PV ��170000 PMT � 0 (A1) for correct values FV � ? P / Y �1 C / Y �1 PMT : END Thus, the real value is $223000. A1 N2 [2] Exercise 25 1. An amount of money $P is invested for 4 years at a nominal annual interest rate of 7%, compounded yearly. The amount of money after 4 years is $300000. (a) Find the value of P , the original amount of money invested. It is given that the rate of inflation during these 4 years is 1.6% per year. [3] (b) (c) Write down the value of the real interest rate. Hence, find the real value of amount of money after 4 years. [1] [2] 2. Ciana invested 8500 EUR in an account that pays a nominal annual interest rate of 12%, compounded monthly. This amount is invested for 9 years and the inflation rate in these 9 years is 1.8%. (a) (b) Find the real interest rate per year. Find the real value of amount of interest incurred after 9 years. [4] [3] 80 SE Production Limited