Interactive practice questions
Jenny opens a high-interest savings account where interest of $6.48%$6.48% per annum is compounded monthly. Her initial deposit is $\$12000$$12000 and she makes monthly deposits of $\$300$$300.
Complete the table below, rounding each answer to the nearest cent, and using the rounded answer to calculate the amounts for the following month.
|
Month |
Balance at beginning of month ($\$$$) | Interest ($\$$$) | Deposit ($\$$$) | Balance at end of month ($\$$$) |
| 1 | $12000$12000 | $64.80$64.80 | $300$300 | $12364.80$12364.80 |
| 2 | $\editable{}$ | $\editable{}$ | $\editable{}$ | $\editable{}$ |
| 3 | $\editable{}$ | $\editable{}$ | $\editable{}$ | $\editable{}$ |
| 4 | $\editable{}$ | $\editable{}$ | $\editable{}$ | $\editable{}$ |
| 5 | $\editable{}$ | $\editable{}$ | $\editable{}$ | $\editable{}$ |
For many investment accounts, interest is calculated daily, but paid into the account on a monthly basis. Choose the most accurate statement.
The interest earned over a year would be more since compounding more regularly results in faster exponential growth.
The interest earned over a year would be less since the daily interest rate would be a lot smaller.
The interest earned over a year would be the same.
Bill has won $\$260000$$260000 and sets up an annuity earning $4.8%$4.8% interest per annum, compounded annually.
At the end of each year Bill withdraws $\$18000$$18000.
Mr and Mrs Lyne have a $\$520000$$520000 mortgage for their home. They are charged $\frac{26}{5}%$265% interest per annum, compounded monthly and make monthly repayments of $\$3750$$3750.
Iain opens a savings account which earns interest of $12%$12% p.a. compounded quarterly. He also adds an additional deposit to his account each year. The balance of the investment, in dollars, at the end of each year is given by $B_n=\left(1+0.03\right)^4\times B_{n-1}+4000$Bn=(1+0.03)4×Bn−1+4000, where $B_0=22000$B0=22000.