IB Mathematics Applications & Interpretation SL 1.7—loan Repayments and Amortization Questionbank

Cary decides to buy a new boat at a cost of $20\,000$, but cannot afford the full amount. The boat dealership offers a financing plan.

A 5-year loan at a nominal annual interest rate of $15\%$, compounded monthly. No deposit is required and repayments are made at the end of each month.

In this question, give all answers correct to the nearest dollar.

Hiroshi takes out a mortgage of $$320\,000$ at a nominal annual interest rate of $4.8\,\%$, compounded monthly. He is offered two repayment schedules.

Schedule A: equal monthly payments at the end of each month over $25$ years.

Schedule B: equal monthly payments at the end of each month over years.

In this question, give all answers correct to the nearest dollar.

Tariq is planning to buy his first apartment. He starts saving $6$ years before he expects to make his purchase. At the end of every month, Tariq deposits $$750$ into a savings account that pays a nominal annual interest rate of $3.6\,\%$, compounded monthly.

In this question, give all answers correct to the nearest dollar.

Akira plans to save for her retirement by depositing $$250$ at the end of every month into an investment account. The account pays a nominal annual interest rate of $4.2\,\%$, compounded monthly.

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 $r$% 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.