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IB Maths AI SL 1.7 Amortization and Annuities

IB Maths AI SL 1.7 Amortization and Annuities
IB Mathematics: applications and interpretation guide, first assessment 2021

Practise configuring financial technology for end-of-period loan or annuity payments and interpreting repayments, balances, withdrawal counts and total interest.

How this is tested

  • enter present value, rate, payment frequency and term with consistent signs in the finance solver
  • calculate the remaining balance after payments or withdrawals and interpret the displayed value
  • find total interest from cash flows rather than treating the finance-solver balance as interest

Question 2

[Maximum number: 17]

Give all answers in this question to the nearest dollar.
Anika invested 10000 Canadian dollars (CAD) in an account which earns a nominal annual interest rate of 3.4 %, compounded monthly.

Question 2(c)

(a)

Determine Anika's monthly loan payment.

After 2 complete years, Anika decides to increase her monthly loan payment to 2200 CAD. At the time, the remaining amount of the loan is 194572 CAD.

[ 5 ]

Question 2(d)(i)

(b)

Calculate the amount by which the loan will decrease during the next 3 complete years.

[ 6 ]

Question 2(d)(ii)

(c)

Determine the total interest that Anika will pay over this 3 -year period.

[ 6 ]