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Nuffield Free-Standing Mathematics Activity Annual percentage rate with more than one instalment

This activity focuses on finding and verifying APRs with more than one instalment. Explore the formulas for different scenarios involving multiple repayments to grasp a deeper understanding. Reflect on the importance of knowing the APR for multi-instalment repayments and learn methods for calculating APR. Delve into setting up a spreadsheet for interval bisection method calculations.

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Nuffield Free-Standing Mathematics Activity Annual percentage rate with more than one instalment

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  1. Nuffield Free-Standing Mathematics Activity Annual percentage rate with more than one instalment Lower APR

  2. APR with more than one instalment It’s a bargain! A few easy instalments. Is this APR really correct? This activity is about finding and checking APRs

  3. APR with more than one instalment For one instalment the loan is: C =which gives the APR, i, as a decimal when a loan of £C is paid back by a single repayment £A after n years. The general APR formula for cases involving more than one instalment isC = where i is the APR expressed as a decimal k is the number identifying a particular instalment Akis the amount of the instalment k tkis the interval in years between the payment of the instalment and the start of the loan

  4. APR with more than one instalment When there are 4 annual instalments, A1, A2, A3 and A4 , the formula becomes Think about What is the formula for 3 annual instalments? What is the formula for 5 annual instalments?

  5. APR with more than one instalment • Reflect on your work Why is it important to know the APR when a loan is repaid in several instalments? What methods do you know for calculating the APR? Write down the formulae used when there is: 1 repayment, 2 repayments, and 3 repayments. How would you set up a spreadsheet to carry out the calculations required by the interval bisection method?

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