Practice questions 17.1


1. Copy the formula provided and identify the terms as being variables or constants. For each variable identified, explain what it represents.


Variable or constant? Variable or constant? F = P(1 + i)t Variable or constant? Variable or constant? Variable or constant?


2. A savings account offers 8⋅5% compound interest for two years. If you deposit €2 500, how much interest will you have earned at the end of two years?


3. Copy and complete the table and find the final amount in each case. Show all your work. Principal invested


€150 €1 700 €6 497 €20 000 €12⋅47 Time


Compound interest rate Final amount


B C


4⋅24% D


E €1 million


2 years 5 years 8 years 4⋅5 years 11 years 0⋅5 years 5% 8% 3⋅5% A


21% 0⋅1 % F


4. When Conan was born, his nanny put €1 000 into an investment account for him to collect when he is 21 years old.


The investment account pays 10% interest per year and is compounded annually. How much will Conan receive when he is 21 years old? (Assume no money is added or removed from the account.)


5. Barry borrowed €10 000 at compound interest for two years. The interest rate was 6% for the first year and 4⋅5% for the second year. Barry agreed to repay the loan and total interest due in one lump sum at the end of two years. Calculate the total amount of money Barry had to pay back.


6. Seamus invested a sum of money for two years. The bank offered 4% compound interest. At the end of the two years, Seamus had €2 162⋅20 in his account. Calculate the initial amount (the principal) he invested.


7. Copy and complete the table and find the missing values for A, B, C, D, E and F. Show all your work. €A


Principal invested


Time


Compound interest rate


Final amount


2 years 2%


€520⋅20 €950 €C 3⋅5% €3 600


5 years 11 years 9 years B %


€1 101⋅31 €9 781⋅80 €E 0⋅5 years D % 1⋅18% €20 000


4⋅5 years F %


€4 007⋅99 €303 540⋅00 €100 242⋅14


274


Linking Thinking 2


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