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]
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