Finance carries about 15 of the 150 marks in Paper 1. The formulas are on the information sheet. The marks go to choosing the right one and converting the interest rate and the number of periods correctly.
Question 1: Compound interest
R5 000 is invested at 8% p.a. compounded annually for 3 years. Find the final amount. A = P(1 + i)ⁿ = 5 000(1.08)³. Answer: R6 298.56.
Question 2: Effective interest rate
Find the effective annual rate of 12% p.a. compounded monthly. 1 + i_eff = (1 + 0.12/12)¹² = (1.01)¹² ≈ 1.1268. Answer: about 12.68% p.a.
Question 3: Reducing-balance depreciation
A R200 000 vehicle depreciates at 15% p.a. on the reducing balance for 4 years. Find its book value. A = P(1 − i)ⁿ = 200 000(0.85)⁴. Answer: R104 401.25.
Question 4: Straight-line depreciation
A R50 000 machine depreciates at 10% p.a. on a straight line for 5 years. Find its book value. A = P(1 − in) = 50 000(1 − 0.5). Answer: R25 000.
Question 5: Future value annuity
R500 is saved at the end of each month for 2 years at 9% p.a. compounded monthly. Find the total. Here i = 0.09/12 = 0.0075 and n = 24. F = 500[(1.0075)²⁴ − 1] / 0.0075. Answer: about R13 094.24.
Question 6: Loan repayment
A R100 000 loan at 12% p.a. compounded monthly is repaid monthly over 5 years, starting one month after the loan. Find the repayment. Here i = 0.01 and n = 60. Using P = x[1 − (1 + i)⁻ⁿ] / i, x = 100 000(0.01) / [1 − (1.01)⁻⁶⁰]. Answer: about R2 224.44 per month.
Question 7: Quarterly compounding
R10 000 is invested at 8% p.a. compounded quarterly for 2 years. Find the final amount. Here i = 0.08/4 = 0.02 and n = 2 × 4 = 8. A = 10 000(1.02)⁸. Answer: R11 716.59.
Stuck on a different question?
When a question stops you, snap it into Snap&Learn — you'll get a CAPS-aligned step-by-step explanation in seconds, and your first three AI solutions are free.