2013 Penrith Selective HS 2U T ri21

Colin borrows $30 000 to buy a new car. He is charged an interest rate
of 15% pa, calculated and compounded monthly, and an amount M is
repaid every month. If A0 is the amount owing after n months, show
that
a. A2 = 30 000 x 1.01252 - M(l + 1.0125) 1
1012S11 -l 1
b. Hence, show that An = $30 000 x 1.0125 11
- M( ·
0.0125
)
c. Find the value of M, to the nearest cent, if the loan is repaid at
2
the end of 7 years.
d. How much extra, in total, will be repaid if the loan is taken over
2
10 years? (Answer to the nearest dollar)

At the completion of his degree, Oliver had a HEC's debt of $100 000. He
plans to repay this in equal monthly repayments of $M Interest is charged
at a rate of 0.5% per month.

(i) Show that the amount owing after 3 months, A3 , is given by 1

~ = l 00 000 x l · 005 3 - M ( l + l · 005 + l · 005 2 )

(ii) If Oliver wishes to pay off his loan by the end of 10 years, then show 2
that he wi 11 need to pay $1 110 per month.

(iii) Show that the amount owing after n months can be written as, 1

A
n
=1·005n [l 00 000 - 200M] + 200M

(iv) If Oliver decides that he can only repay $750 each month, how long 2
will it take him to repay the loan?
(Answer in years and months)
201.5_Buker_College_ Yr 12 _2U _l\{:lths_T ri2l_Ex2m_ Solns

Rachael borrows $P for an overseas holiday.

This loan plus interest is to be repaid in equal monthly instalments of $232 over five years.
Interest of 6% p.a. is charged monthly on the balance owing at the start of each month.

Let A,, be the amount owing at the end of n months.

(i) Show that Az = P(l.005) 2 - 232(1+1.005) 2

(ii) Prove that A,, = P(l.005)" - 46400(1.005" -1) 2

(iii) Hence, or otherwise, find the amount that Rachael borrowed. 2