3. Find the simple interest and compound interest earned on each of these amounts over the specifi ed number of years.


Principal (i) (ii)


(iii) (iv) (v)


(vi)


(vii) (viii) (ix)


€100 €700


€2 500 €4 350


€10 000 €299


€250 000 €250 000 €23 550


(x) €3 000 000


Rate (%) 5


3


2·5 6


1·5 4·5 1·5 1·5 11


0·5


4. A savings account in a bank contains €495 and earns 3% interest compounded annually.


(i) How much money will there be in the account after three years?


(ii) How much interest has been earned?


5. A principal of €2 000 is placed in a savings account at 3% per annum compounded annually.


How much is in the account after (i) one year (ii) two years (iii) three years?


6. Which of the following loans charges less interest?


Loan A: A simple interest loan of €10 000 at a rate of 7% per annum for 3 years.


Loan B: A compound interest loan of €10 000 at a rate of 6·5% per year for 3 years.


7. Find the diff erence between the simple interest and the compound interest on €6 000 for two years at 4·5% per annum.


Time (years) Type of interest paid Total amount Total interest


earned


1 1 2 3 2 3 3 3 2 3


Simple


Compound Simple Simple


Compound Compound Simple


Compound Simple


Compound


8. Lin obtained a loan of €25 000 from the Syndicate Bank to renovate her house. If the rate of interest is 8% compounded annually, how much will she have to pay to the bank at the end of two years to clear her loan? Assume she makes no payments before this time.


9. Shelly took a loan of €11 000 from AB Finance to purchase a car. If the company charges compound interest at 12% per annum during the fi rst year and 12 1


__ 2 % per annum during the second year, how much will she have to pay back at the end of the 2 years?


10. €1 200 is placed in an account at 4% compounded annually for 2 years. The fi nal amount is then withdrawn and placed in another bank at the rate of 5% compounded annually for 3 years. What is the balance in the second account at the end of the third year?


11. Hannah borrowed €20 000 from a bank at 12% simple interest per annum. She loaned it to Andy at the same rate, but compounded annually.


(i) Find the total profi t she made at the end of two years.


(ii) Express her profi t as a percentage of the original sum of money.


Section B Moving forward


207


13 Money matters 1


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