Financial Mathematics

What is the difference between interest and interest rate?

• Interest is the percentage charged on the loan, while the interest rate is the money earned or paid over time.

• Interest is the money earned or paid on an investment or loan, while the interest rate is the percentage at which the interest is calculated.

• Interest and interest rate mean the same thing.

• Interest is a type of tax, and the interest rate is how frequently the tax is charged.

Calculate the simple interest earned on an investment of R5,000 for 3 years at an interest rate of 6% per annum.

• R600

• R900

• R1800

• R2000

Zola buys a fridge worth R15,000 on hire purchase. The store charges 10% interest per year and Zola agrees to pay it off over 4 years. What will the total cost be after the 4 years? (Assume simple interest)

• R16500

• R21000

• R18000

• R19500

Which of the following best describes compound interest?

• Interest calculated only on the initial amount invested.

• Interest calculated on both the initial amount and the accumulated interest.

• Interest that remains the same every year.

• Interest that decreases over time.

Thandi invests R2,000 at a compound interest rate of 5% per year. What will be the value of her investment after 3 years?

• R2315.25

• R2630.50

• R2524.63

• R2830.50

The inflation rate in South Africa is currently 6%. If a loaf of bread costs R15 today, what will it cost after 2 years?

• R16.85

• R17

• R16.87

• R18

If the population of a city in South Africa is currently 1.5 million and the population grows at 2% per year, what will the population be after 5 years?

• 1.65 million

• 1.66 million

• 1.653 million

• 1.656 million

A South African tourist travels to the UK and exchanges R20,000 into pounds at an exchange rate of R24.50 = £1. How many pounds will the tourist receive?

• £816.33

• £1,020.41

• £900.75

• £1,100.00

Sipho buys a used car through hire purchase. The cost of the car is R120,000. He has to pay a 10% deposit and the remaining balance is paid off over 5 years with an interest rate of 8% per year. What is the amount Sipho needs to pay as a deposit?

• R10000

• R12000

• R14000

• R15000

Sipho buys a used car through hire purchase. The cost of the car is R120,000. He has to pay a 10% deposit and the remaining balance is paid off over 5 years with an interest rate of 8% per year. After Sipho’s deposit, what is the total amount he will repay over 5 years?

• R118000

• R140000

• R151200

• R160000