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Arithmetic and Interest

Arithmetic and Interest. Ex. 8A Q.1 (i). Calculate to the nearest cent where necessary the compound interest on (i) €600 for 2 years at 5%. Year 1 P 1 = €600 R 1 = 5% A 1 = ? I 1 = ?. Year 2 P 2 = ? R 2 = 5% A 2 = ? I 2 = ?. €630. (600)(1.05) = €630. (630)(1.05) = €661.50.

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Arithmetic and Interest

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  1. Arithmetic and Interest

  2. Ex. 8A Q.1 (i) Calculate to the nearest cent where necessary the compound interest on (i) €600 for 2 years at 5% Year 1 P1 = €600 R1 = 5% A1 = ? I1 = ? Year 2 P2 = ? R2 = 5% A2 = ? I2 = ? €630 (600)(1.05) = €630 (630)(1.05) = €661.50 630 – 600 = €30 661.50 – 630 = €31.50 Compound Interest = 661.50 – 600 = €61.50

  3. Calculate to the nearest cent where necessary the compound interest on (ii) €1800 for 2 years at 9% Year 1 P1 = €1800 R1 = 9% A1 = ? Year 2 P2 = ? R2 = 9% A2 = ? €1962 (1800)(1.09) = €1962 (1962)(1.09) = €2138.58 Compound Interest = 2138.58 - 1800 = €338.58

  4. Ex. 8A Q.1 (iii) Calculate to the nearest cent where necessary the compound interest on (iii) €3500 for 3 years at 7½% P = €3500 R = 7½ % A1 = ? (3500)(1.075) = €3762.50 A2 = ? (3762.50)(1.075) = €4044.69 A3 = ? (4044.69)(1.075) = €4348.04 Compound Interest = 4348.04 - 3500 = €848.04

  5. Ex. 8A Q.1 (iv) Calculate to the nearest cent where necessary the compound interest on (iii) €7800 for 3 years at 3½% P = €7800 R = 3½ % A1 = ? (7800)(1.035) = €8073 A2 = ? (8073)(1.035) = €8355.56 A3 = ? (8355.56)(1.035) = €8648.00 Compound Interest = 8648 – 7800 = €848

  6. Ex. 8A Q.2 €4600 was invested for 2 years at compound interest. If the rate for the first year was 6% and for the second year was 9%, find the total interest for the two years. Year 1 P1 = €4600 R1 = 6% A1 = ? Year 2 P2 = ? R2 = 9% A2 = ? €4876 (4600)(1.06) = €4876 (4876)(1.09) = €5314.84 Compound Interest = 5314.84 – 4600 = €714.84

  7. Ex. 8A Q.3 A company borrowed €12000 from a bank at 11% per annum, compound interest. The company repaid €5000 at the end of the first year. How much was owed to the bank at the end of the second year. Year 1 P1 = €12000 R1 = 11% A1 = ? Year 2 P2 = ? R2 = 11% A2 = ? 13320 – 5000 = €8320 (12000)(1.11) = €13320 (8320)(1.11) = €9235.20 ANS: Amount owed = €9235.20

  8. Ex. 8A Q.4 €2500 was invested in a building society. If it amounted to €2612.50 after one year calculate the rate of interest? P = €2500 R = ? A = €2612.50 A/P = 2612.5/2500 = 1.045 Interest rate = 4½%

  9. Ex. 8A Q.5 A sum of money is invested at 7% p.a. if it amounts to €6848 after one year find the sum invested? P = ? R = 7% A = €6848 A = 107% P = 100% €6848 is 107% 6848/107 = €64 is 1% (64)(100) = €6400 is 100% ANS: P = €6400

  10. Income Tax Tax payable = Gross Tax – Tax credits

  11. Income Tax Questions can be done by filling in the following table

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