IBDP Maths AA: Topic : SL 1.4: Financial applications of geometric sequences and series: IB style Questions HL Paper 2

Question

Give your answers in this question correct to the nearest whole number.

Shahid invested 25 000 Singapore dollars (SGD) in a fixed deposit account with a nominal

annual interest rate of 3.6 %, compounded monthly.

    1. Calculate the value of Shahid’s investment after 5 years. [3]

      At the end of the 5 years, Shahid withdrew x SGD from the fixed deposit account and

      reinvested this into a super-savings account with a nominal annual interest rate of

      5.7 %, compounded half-yearly.

      The value of the super-savings account increased to 20 000 SGD after 18 months.

    2. Find the value of x . [3]

Answer/Explanation

Ans:

(a)

\(FV=25000\times (1+ \frac{3.5}{100\times 12})^{12\times 5}\)

OR

N= 5

I%=3.6

PV= \(\mp 25000\)

\(P/Y\) = 1

C/Y = 12

OR

N= 60

I%=3.6

PV = \(\mp 25000\)

P/V = 12

C/Y = 12

FV=29922(SGD)

(b)

2000= PV\times \((1+\frac{5.7}{100\times 2})^{2\times 1.5}\)

OR

N= 1.5

I%=5.7

FV=\(\pm 20000\)

\(P/Y\) = 1

C/Y= 2

OR

N=3

I%= 5.7

FV = \(\pm 20000\)

P/V=2

C/Y = 2

X= 18383 (SGD)

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