Practice IB Mathematics Applications & Interpretation (AI) Topic SL 1.4—financial Apps – Compound Interest, Annual Depreciation with authentic exam-style questions for both SL and HL students. This question bank focuses on the exact syllabus content for SL 1.4—financial Apps – Compound Interest, Annual Depreciation and mirrors Paper 1, 2, 3 style where relevant.
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Give your answers in this question correct to the nearest whole number.
Imon invested Singapore dollars (SGD) in a fixed deposit account with a nominal annual interest rate of , compounded monthly.
Calculate the value of Imon’s investment after years.
At the end of the years, Imon withdrew SGD from the fixed deposit account and reinvested this into a super-savings account with a nominal annual interest rate of , compounded half-yearly.
The value of the super-savings account increased to SGD after months.
Find the value of .
Leila wants to buy a new motorcycle priced at €18 000, but cannot afford the full amount. The dealership offers two options to finance a loan.
Finance option A:
A 5 year loan at a nominal annual interest rate of 11.2% compounded quarterly. No deposit required and repayments are made each quarter.
Finance option B:
A 5 year loan at a nominal annual interest rate of % compounded monthly. Terms of the loan require a 15% deposit and monthly repayments of €315.
In this question, give all answers to two decimal places.
Find the repayment made each quarter for Option A.
Find the total amount paid for the motorcycle under Option A.
Find the interest paid on the loan for Option A.
Find the amount to be borrowed for Option B.
Find the annual interest rate, .
Determine which option results in the lower total amount paid over 5 years, including any deposit. Justify your answer.
Leila's motorcycle depreciates at an annual rate of 18% per year.
Find the value of Leila's motorcycle five years after it is purchased.
Give your answers to parts 1, 2 and 3 to the nearest whole number.
Elena has 16 000 euros (EUR) to invest for five years. She has two options for how to invest the money.
Option A: Invest the full amount, in EUR, in a fixed deposit account in a bank in Spain.
The account pays a nominal annual interest rate of k% , compounded yearly, for the five years. The bank manager says that this will give Elena a return of 19 654 EUR.
Option B: Invest the full amount, in Singapore dollars (SGD), in a fixed deposit account in a bank in Singapore. The money must be converted from EUR to SGD before it is invested.
The exchange rate is 1 EUR = 1.45 SGD.
The account in the bank in Singapore pays a nominal annual interest rate of 4.8 % compounded monthly.
Calculate the value of k.
Calculate 16 000 EUR in SGD.
Calculate the value of this investment in SGD after five years.
Elena chose option B. At the end of five years, Elena converted this investment back to EUR. The exchange rate, at that time, was 1 EUR = 1.43 SGD.
Calculate how much more money, in EUR, Elena earned by choosing option B instead of option A.
Leila wants to buy a new motorcycle priced at €16 000, but cannot afford the full amount. The dealership offers two options to finance a loan.
Finance option A:
A 5 year loan at a nominal annual interest rate of 10.8% compounded quarterly. No deposit required and repayments are made each quarter.
Finance option B:
A 5 year loan at a nominal annual interest rate of % compounded monthly. Terms of the loan require a 12% deposit and monthly repayments of €288.20.
In this question, give all answers to two decimal places.
Find the repayment made each quarter for Option A.
Find the total amount paid for the motorcycle under Option A.
Find the interest paid on the loan for Option A.
Find the amount to be borrowed for Option B.
Find the annual interest rate, .
Determine which option results in the lower total amount paid over 5 years, including any deposit. Justify your answer.
Leila's motorcycle depreciates at an annual rate of 18% per year.
Find the value of Leila's motorcycle five years after it is purchased.
Bryan wants to buy a new car priced at €14 000, but cannot afford the full amount. The car dealership offers two options to finance a loan.
Finance option A:
A 6 year loan at a nominal annual interest rate of 14% compounded quarterly. No deposit required and repayments are made each quarter.
Finance option B:
A 6 year loan at a nominal annual interest rate of % compounded monthly. Terms of the loan require a 10% deposit and monthly repayments of €250.
In this question, give all answers to two decimal places.
Find the repayment made each quarter for Option A.
Find the total amount paid for the car under Option A.
Find the interest paid on the loan for Option A.
Find the amount to be borrowed for Option B.
Find the annual interest rate, .
Determine which option results in the lower total amount paid over 6 years, including any deposit. Justify your answer.
Bryan's car depreciates at an annual rate of 25% per year.
Find the value of Bryan's car six years after it is purchased.