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Tuesday, April 14, 2009

Financial Transaction Online test : Guru's solutions

Common errors:
Q12 (12 got this wrong)
A man borrowed $ P at 10% interest compounded annually. Determine P if the
compound interest for two years is $ 6615.

P + 6615 = P (1+ 10/100)^2 ---- this is a compound interest question!
P + 6615 = P (1.01)^2
P + 6615 = 1.21P
0.21P = 6615
P = $31500

Q3 (10 got this wrong)
clues: calculate balance after paying deposit.
i.e. 80% x 145000 = $116000

Use this balance to calculate total interest for 7 years.
Then add to balance. (This is the total repayment amount)
This repayment amount divided by 7 = repayment for each year.

Repayment for each year + road tax + insurance = Total cost per year

Total cost per year / 12 months = monthly repayment.

Q18In what time will $1500 amount to $1770 at 9% per annum simple interest?
$1770 - $1500 = $270 (interest)

using I=(PRT)/100 formula, you should be able to get

270 = (1500 x 9 x time)/100

Then work out the time.

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