IB Maths AI HL Sl 1 7 Amortization and Annuities Topic Practice

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Study SL 1.7—Amortization and annuities conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

Question 1

[Maximum number: 12]

Give your answers in parts (a), (d)(i), (e) and (f) to the nearest dollar.
Daisy invested 37000 Australian dollars (AUD) in a fixed deposit account with an annual interest rate of 6.4 % compounded quarterly.

Question (a)

(a)

Daisy is saving to purchase a new apartment. The price of the apartment is 200000 AUD.
Daisy makes an initial payment of 25 % and takes out a loan to pay the rest.

Write down the amount of the loan.

[ 1 ]

Question (b)

(b)

The loan is for 10 years, compounded monthly, with equal monthly payments of 1700 AUD made by Daisy at the end of each month.

For this loan, find

[ 5 ]

Question (i)

(i)

the amount of interest paid by Daisy.

[ 2 ]

Question (ii)

(ii)

the annual interest rate of the loan.

[ 3 ]

Question (c)

(c)

After 5 years of paying off this loan, Daisy decides to pay the remainder in one final payment.

Find the amount of Daisy's final payment.

[ 3 ]

Question (d)

(d)

Find how much money Daisy saved by making one final payment after 5 years.

[ 3 ]
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