Maths B Notes 1 – Finances

Questions to be on the Test: Definitions:

Q8. [K&P]C/B Lev. FV/PV, simple. Annuities: A series of fixed payments made regularly over a
Q9. [K&P]C/B Lev. Annuities period of time. Each payment is made up of the interest earned
Q12. [K&P]B/A Lev. Home Loans, Full by the investment and a small part of the capital invested.
Working. Inflation/Appreciation: The process of increasing prices.
Q17. [M&P]C/B Lev. Home Loans, GC Deflation/Depreciation: The process of decreasing prices.
Calculator use. Amortisation: Home loan, or a large amount of money borrowed
from the bank that is payed back over a number of years.
Q8. FV/PV – SIMPLE
n×t
i
Rule: FV=PV 1+ ( )
n
−n ×t
Q9. Annuities
−n ×t
i i
OR PV=FV 1+
[ ]
n
Rule: PV=FV
[∑ ( )]
1+
n

- Should be simple re-arranging. Eg. If your tightass grandma wants to give you $1000 on
Could have to use √ n
❑ or log. the 1st of January in 4, 5 and 6 years time at 5% p.a., what
- Don’t forget to use a decimal for
‘i’. must she invest now?
- Practice questions are on Topic 3
sheet. So, instead of doing this three times;
- Inflation questions are also
−1× 4
0.05
solved using this formula.
- Formulas will be on test.
NOTE THAT RULE WILL CHANGE TO Rule:
[
PV=1000 1+
1 ]
n ×t
i
FV=PV
( )
1−
n
Do this: (with this communication)

IF THE QUESTION IS ABOUT Yr 4 FV=100 I=5% N=1 T=4 PV=1000(1.05)-4

0
Q12. Home Loans, Full Working. Yr 5 FV=100 I=5% N=1 T=4 PV=1000(1.05)-5
Rules: (Dunbar’s Class) 0
i nt Yr 6 FV=100 I=5% N=1 T=4 PV=1000(1.05)-6

D 1+ i =P
( n)
nt

[ ] ( )
1+
n
i
n
−1 0

Then PV = 1000(1.05)-4 + 1000(1.05)-5 + 1000(1.05)-6

= 822.70+783.53+746.22

(Wright’s Class) Q17. Home Loans on GC calculator:

−nt
i
D=RP
[ ]
( ) 1− 1+

i
n
n

Q 12 cont. Some of the trickier questions in

class asked us to find the debt after a number
Go TVM on MENU
F2; Compound Interest (EVEN THOUGH IT SAYS
AMORTIZATION ON F4)
Screen Details (example question in sheet)
“$250,000 is borrowed over 30 years at a rate of 7.5% pa.
Repayments are made monthly. Calculate the monthly
of years or repayments. The way to go about
repayments and the total cost of the loan.”
this is to:
n= 360
1. Work out your repayment. I%=7.5 (Not a decimal)
2. Take away the number of years from PV=250000
your original number; don’t just plug PMT=0  PMT=-2500 (will
the number in. IT WON’T WORK AND ALWAYS BE NEGATIVE)
IT’S TEACHER SNEAKINESS. Try one FV=0 (Don’t use this with home
of the example questions in the loan)
handout sheet, Q5, 6 & 7. P/Y=12 (Payments a Year)