In this question give all answers correct to two decimal places.

Diogo deposited \(8000\) Argentine pesos, \({\text{ARS}}\), in a bank account which pays a nominal annual interest rate of \(15\% \), compounded monthly.

Find how much interest Diogo has earned after \(2\) years.

Carmen also deposited \({\text{ARS}}\) in a bank account. Her account pays a nominal annual interest rate of \(17\% \), compounded yearly. After three years, the total amount in Carmen’s account is \({\text{10}}\,{\text{000}}\,{\text{ARS}}\).

Find the amount that Carmen deposited in the bank account.

The first time an answer is not given to two decimal places the final (A1) is not awarded.

\(FV = 8000 \times {\left( {1 + \frac{{15}}{{100 \times 12}}} \right)^{2 \times 12}}\,\,\,\left( {FV = 8000 \times {{(1.0125)}^{2 \times 12}}} \right)\)       (M1)(A1)

OR

\(I = 8000 \times {\left( {1 + \frac{{15}}{{100 \times 12}}} \right)^{2 \times 12}} - 8000\)       (M1)(A1)

Note: Award (M1) for substitution into compound interest formula, (A1) for correct substitutions.

OR

\(N = 24\)

\(I\%  = 15\)

\(PV =  - 8000\)

\(PMT = 0\)

\((FV = 10778.8084)\)

\(P/Y = 12\)

\(C/Y = 12\)            (A1)(M1)

Note: Award (A1) for \(C/Y = 12\) seen, (M1) for all other correct entries. \(FV = 10778.8084\) need not be seen.

OR

\(N = 2\)

\(I\%  = 15\)

\(PV =  - 8000\)

\(PMT = 0\)

\((FV = 10778.8084)\)

\(P/Y = 1\)

\(C/Y = 12\)            (A1)(M1)

Note: Award (A1) for \(C/Y = 12\) seen, (M1) for all other correct entries. \(FV = 10778.8084\) need not be seen.

interest \( = 2778.81\)            (A1)    (C3)

Note: Final answer must be to two decimal places for the (A1) to be awarded.

 

\(N = 3\)

\(I\%  = 17\)

\((PV =  \pm 6243.705564)\)

\(PMT = 0\)

\((FV =  \mp 10\,000)\)

\(P/Y = 1\)

\(C/Y = 1\)          (A1)(M1)

Note: Award (A1) for \(FV =  \mp 10\,000\), (M1) for all other correct entries. \(PV =  \pm 6243.705564\) need not be seen.

OR

\(10\,000 = PV \times {\left( {1 + \frac{{17}}{{100}}} \right)^3}\)          (M1)(A1)

Note: Award (M1) for substituting into compound interest formula, (A1) for equating \(10\,000\) to the correctly substituted compounded interest formula.

\((PV = )\,\,6243.71\)                 (A1)         (C3)

Note: Answer must be to two decimal places.

Question 12: Compound Interest
The use of the TVM solver, with lack of working, remains a source of concern, though many more are writing down the calculator display; candidates are advised still to write down substituted formulas prior to using the TVM solver. Compounding periods remain a source of confusion
The use of the 0.15 and 0.17 was a common error, as was the computation of the amount in part (a).

Question 12: Compound Interest
The use of the TVM solver, with lack of working, remains a source of concern, though many more are writing down the calculator display; candidates are advised still to write down substituted formulas prior to using the TVM solver. Compounding periods remain a source of confusion
The use of the 0.15 and 0.17 was a common error, as was the computation of the amount in part (a).