102090 Assignment 1

MS-F5 Annuities Unit Plan

Outcomes Duration
MS2-12-5 MS2-12-9 MS2-12-10 8 lesson, 50 mins each

Lesson
Content Learning Activities
Sequence
Introduce the concept of annuity, make
Lesson 1 students know the property of annuities,
Identify annuities
Week One so that they are able to distinguish
between annuity and other investments.
Calculating the total amount of payments
(sum of the cash flow), make students
aware that as the result of compound
Lesson 2 Preparation for annuity interest, the value of annuity does not
Week One calculation equals to the total amount of cash flow.
And introduce the idea that the value of
annuity can be calculated period-by-period
recurrently.
Make students know how to model the
Calculating the annuity value of annuity investment (eg.
Lesson 3
investment using ICT superannuation) as a recurrent relation in
Week One
(ACMGM099) the Excel, and graph the value of annuity
investment in response to time.
Make students know how to model the
Calculating the annuity value of annuity loan (eg. home loan) as a
Lesson 4
loan using ICT recurrent relation in the Excel, and graph
Week One
(ACMGM099) the value of annuity loan in response to
time.
Lead students to investigate the effect of
varying the amount and frequency of each
The effect of variation
Lesson 5 contribution, the interest rate or the
in payment schedule
Week One payment amount on the duration and/or
(ACMGM099)
future value of the annuity both
numerically or graphically.
Students make their decision about the
Weekend Take-home assignment
choice of loan and investment.
Lead students to build the future value
Calculation using future
Lesson 6 interest factors table, make students learn
value interest factors
Week 2 and practice how to calculate future value
table (ACMGM100)
and contribution using the table.
Invite a financial expert to the classroom to
Lesson 7
Industrial insight interpret the industrial application and
Week 2
issues of annuity.
Lesson 8
Unit Assessment An in-class exam about the annuity.
Week 2
 102090 Assignment 1

Lesson 6 Week Two

Topic area: Stage of Learner: Syllabus Pages:

MS-F5 Annuities

Use a table of future value interest Stage 6 Year 12

factors to perform annuity Mathematics Standard 2
calculations, for example calculating
the future value of an annuity, the
contribution amount required to
achieve a given future value or the
single sum that would produce the
same future value as a given annuity
(ACMGM100)
Date: Location Booked: Lesson Number: 6 / 8

Time: 50 minutes Total Number of students Printing/preparation

Travel Game board

Outcomes Assessment Students learn about Students learn to

Syllabus outcomes The Travel Hand calculation if Build the future value
Game is used annuities using future interest factors table, learn
makes informed decisions
as a self- value interest factors and practice how to
about financial situations,
assessment of table. calculate future value and
including annuities and loan
repayments MS2-12-5 students contribution using the
understanding table.
chooses and uses appropriate s and skills
technology effectively in a about
range of contexts, and calculation
applies critical thinking to using future
recognise appropriate times value interest
and methods for such use factors table.
MS2-12-9

uses mathematical argument

and reasoning to evaluate
conclusions, communicating
a position clearly to others
and justifying a response
MS2-12-10

Cross Curriculum themes & General capabilities
Explicit subject specific concepts and skills
Students should have an idea about the calculation
involving annuities for further studies. The future
value interest factor table is a concrete reference for
the calculation in the exam situation.
 102090 Assignment 1

Intellectual Quality 1.1 Deep knowledge 1.4 Higher-order thinking

This refers to pedagogy focused on producing deep understanding of important,
substantive concepts, skills and ideas. Such pedagogy treats knowledge as something 1.2 Deep understanding 1.5 Metalanguage
that requires active construction and requires students to engage in higher-order 1.3 Problematic 1.6 Substantive
thinking and to communicate substantively about what they are learning.
knowledge communication

Quality Learning Environment 2.1 Explicit quality 2.4 Social Support

This refers to pedagogy that creates classrooms where students and teachers work criteria
productively in an environment clearly focused on learning. Such pedagogy sets high and 2.5 Students self-
explicit expectations and develops positive relationships between teacher and students 2.2 Engagement regulation
and among students.
2.3 High Expectations 2.6 Student direction

Significance 3.1 Background 3.4 Inclusivity

This refers to pedagogy that helps make learning more meaningful and important to knowledge
students. Such pedagogy draws clear connections with students prior knowledge and 3.5 Connectedness
identities, with contexts outside of the classroom, and with multiple ways of knowing all 3.2 Cultural knowledge
3.6 Narrative
cultural perspective.
3.3 Knowledge
integration

How the quality teaching elements you have identified are achieved within the
lesson?

Teaching Indicators of presence in the lesson

element

1.1 Develop students idea about annuity calculation using the recurrent relation.
1.2 Students demonstrate their understanding about the annuity calculation through their
performance in the exercise.

2.2 The Travel Game take the role of exercise, but increase the level of engagement.
2.4 Group work and game develop students interpersonal skills.
2.5 The Travel Game is regulated by students themselves and their peers.
3.1 Recall students knowledge in the recurrent calculation from Excel calculation.
3.4 The group work and game involves every students.
3.5 Develop students skill in real life financial calculation.
 102090 Assignment 1

Time Teaching and learning actions Organisation Centred

T/S

Introduction Recall the digital calculation of annuities, Teacher: Lead the revision T and S
emphasis the recurrent relation in annuity for previous knowledge
value.

Student: recall their

5 mins knowledge

Resources:

Body Activity 1. Construct the future value Teacher: demonstrate T and S

interest factor table. example, construct the future
value interest factor table
Teacher demonstrate the calculation of future
value interest factor at 1% for 1, 2, 3 and 4
10-15 mins period.
Student: work out the future
Students form four groups, and calculate the value interest factors table in
value interest factor at 2%, 3%, 4% and 5% groups
respectively for different periods. Then
teacher lead students to put all the
information into a table. Resources:

Activity 2. Calculation of annuity value using Teacher: show examples to T

future value interest factors table. students

Show students example about calculation of

annuity value, remaining value of an annuity
loan, and contribution amount superannuation Student: get the idea of
and home loan. calculation using future value
10 min interest factors table

Resources:

Activity 3. Travel Game (exercise for annuity Teacher: hand out resources, S
calculation). walk around to assist students
if needed
Students form groups of 3 or 4 according to
the class size. Each group is provided with
the Travel Game board, a question sheet, a
pack of cut Opportunity Cards sheet, and a Student: Play the game
pair of red and blue dice.
Each student put an indicator at the START Resources: Travel Game set,
cell, and take turns to act clockwise. In one dices
turn, the current person roll two dices, the
student on the right hand side hold the
Question Sheet, and ask the current person to
 102090 Assignment 1

calculate the annuity value in the

corresponding row and column shown on the
two dices. For example, if the red die shows a
2 the blue die shows a 3, the current person
have to calculate The future value of $800
20-25 mins contributions for 2 periods at 2% interest.
If the current persons answer is correct,
he/she move the indicator one step forwards,
otherwise the indicator stay in the current
cell. Then the dices and the Question Sheet
are passed to the next person clockwise.
If the indicator is moved to the Opportunity
cell, the person must draw an opportunity
card, and answer the question according to
the card. If the answer is correct, the indicator
can be moved one step forwards. Otherwise,
the indicator must be moved one step
backwards.
The person who arrive the FINISH cell first
win the game.

Conclusion Have student discuss about the common Teacher: listen to students S and T
mistakes they made in the game, lead their discuss, lead the discuss
discussion to the difference between annuities
5-10 mins and normal loans.
Student: participate in
discussion

Resources:

Resources

Future Value Interest Factors Table

Period Interest
1% 2% 3% 4% 5%
1 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.0100 2.0200 2.0300 2.0400 2.0500
3 3.0301 3.0604 3.0909 3.1216 3.1525
4 4.0604 4.1216 4.1836 4.2465 4.3101
102090 Assignment 1

Travel Game Board

FINISH FINISH FINISH FINISH

Opportunity Opportunity

Opportunity

Opportunity

Opportunity Opportunity

Opportunity

Opportunity

Opportunity

Opportunity Opportunity

Opportunity

START START START START

 102090 Assignment 1

Question Sheet
Red Dice
1 2 3 4 5 6
Interest-
1% 2% 3% 4% 5%
free
The future
value of
1 $500 $ 2,030.20 $ 2,060.80 $ 2,091.81 $ 2,123.23 $ 2,155.06 $2000
contributions
for 4 periods
The
contributions
2 to achieve $ 1,231.41 $ 1,213.12 $ 1,195.14 $ 1,177.45 $ 1,160.06 $1250
$5000 in 4
periods
The future
value of
Blue 3 $800 $ 1,608.00 $ 1,616.00 $ 1,624.00 $ 1,632.00 $ 1,640.00 $1600
contributions
for 2 periods
The
contributions
Dice 4 to achieve $ 1,980.13 $ 1,960.53 $ 1,941.18 $ 1,922.09 $ 1,903.25 $2000
$6000 in 3
periods
The future
value of
5 $1000 $ 3,030.10 $ 3,060.40 $ 3,090.90 $ 3,121.60 $ 3,152.50 $3000
contributions
for 3 periods
The
remaining
amount for a
$10000 loan
6 $ 8,191.00 $ 8,384.00 $ 8,579.00 $ 8,776.00 $ 8,975.00 $8000
after 2
periods with
contributions
of $1000

Opportunity Cards Answers

$5202 $2040
$3000 $9600
102090 Assignment 1

Opportunity Cards

If a $5000 deposit is If a $2000 loan is taken

taken at 2% interest at 4% interest per
per annum, what is its annum, what is its
value after 2 years? value after 6 months?

If a $25000 load is
If a $1000 yearly taken at 3% interest
contribution is paid at per annum, the
4% interest per annum, monthly contribution is
what the total amount $800, what the total
paid after 3 years? amount paid back
during the first year?

Bonus Dice Roll Bonus Dice Roll

102090 Assignment 1
102090 Assignment 1

Assignment (15 marks)

Arbitrage is an investment technique used to make risk-free profit. In the real world
financial industry, arbitragers make profits by taking a low interest debt and invest
the money into a high interest financial product, without putting their own money.
After exploring the financial market, you identified three debt option and four
investment options that allow you to arbitrage. The options are described below:

Debt A: you can sell an annuity product at interest rate 6% per annum, the
buyer of this product pays you $1000 monthly, and after 2 years you pay the
value of the annuity back to the buyer.
Debt B: you can take a $24000 annuity loan at 3% per annum from an
investor, you have to repay $500 monthly during the 2-year period, and
repay the remaining value at the end of year 2.
Debt C: you can borrow $24000 from a bank for 2 year at interest rate 4% per
annum compounded yearly, you repay the total amount at the end of year 2.

Investment 1: a company offers you an annuity product, which requires you

to contribute $500 monthly. You will be paid the value at interest rate 8% per
annum at the end of year 2.

Investment 2: you can lend $12000 to a person at 4% per annum

compounded monthly, you will be repaid at the end of year 2.

Investment 3: a person wants to take a $24000 annuity loan at 5% per

annum from you, he will repay $500 monthly during the 2-year period, and
repay the remaining value at the end of year 2.

Investment 4: you can support you friends store by paying $3000 for his
stocks every six months, he promise to repay you $13500 at the end of year
2.

In order to arbitrage, you need to choose at least one debt and more than one
investments within the following constraints:
1. You want to achieve a target profit of $1000 or more after 2 year;
2. Your total cash outflow should NOT exceed your cash inflow, so that you do
not need to put in your own money.
Analyse the cash flow and value of your chosen debt(s) and investments in Excel,
and calculated your future profit at the end of year 2. Submit your Excel work file
and a 1-paragraph statement of your choice in Word to the teachers email.
 102090 Assignment 1

Marking Rubrics
Working Towards
Substances Absent (0) Satisfied (2) Outstanding (3) Marks
(1)
Identify both the
Identify and Identify and
Have no cash flow and
calculate either calculate both the
Understand understanding the value of the
the cash flow or cash flow and the
the debts about the debt(s), with
the value of the value of the
debt(s). some calculation
debt(s). debt(s) correctly.
error.
Identify both the Identify and
Identify and
Have no cash flow and calculate both the
Understand calculate either
understanding the value of the cash flow and the
the the cash flow or
about the investments, value of the
investments the value of the
investments. with some investments
investments.
calculation error. correctly.
Perform Excel
Correct excel
Perform some calculation using
calculation with
Use of Excel in No Excel calculation in the right data,
no mistake in
calculation calculation Excel, using the but some errors
data and
inappropriate data in the formulas
command.
and commands.
Have at least one
debt and more
Do not have at Satisfy all the
than one Satisfy all the
Choice of debt least one debt constraint, but
investments in the constraint, with
and and more than have some
choice, but do not no calculation
investment one investments calculation in the
satisfy either of error.
in the choice. profit.
the two
constraints.
State the choice
State the choice and the
Statement of List the choice
No statement and the calculated value,
choice only.
calculated value. and give reason(s)
for the choice.
102090 Assignment 1

Answer for the Seven Options

Debt A
6% per annum $1000 contribution
Value at the
Month Value at the Start Interest Contribution End
1 $0.00 $0.00 $1,000.00 $1,000.00
2 $1,000.00 $5.00 $1,000.00 $2,005.00
3 $2,005.00 $10.03 $1,000.00 $3,015.03
4 $3,015.03 $15.08 $1,000.00 $4,030.10
5 $4,030.10 $20.15 $1,000.00 $5,050.25
6 $5,050.25 $25.25 $1,000.00 $6,075.50
7 $6,075.50 $30.38 $1,000.00 $7,105.88
8 $7,105.88 $35.53 $1,000.00 $8,141.41
9 $8,141.41 $40.71 $1,000.00 $9,182.12
10 $9,182.12 $45.91 $1,000.00 $10,228.03
11 $10,228.03 $51.14 $1,000.00 $11,279.17
12 $11,279.17 $56.40 $1,000.00 $12,335.56
13 $12,335.56 $61.68 $1,000.00 $13,397.24
14 $13,397.24 $66.99 $1,000.00 $14,464.23
15 $14,464.23 $72.32 $1,000.00 $15,536.55
16 $15,536.55 $77.68 $1,000.00 $16,614.23
17 $16,614.23 $83.07 $1,000.00 $17,697.30
18 $17,697.30 $88.49 $1,000.00 $18,785.79
19 $18,785.79 $93.93 $1,000.00 $19,879.72
20 $19,879.72 $99.40 $1,000.00 $20,979.12
21 $20,979.12 $104.90 $1,000.00 $22,084.01
22 $22,084.01 $110.42 $1,000.00 $23,194.43
23 $23,194.43 $115.97 $1,000.00 $24,310.40
24 $24,310.40 $121.55 $1,000.00 $25,431.96
Total Received
$24,000
102090 Assignment 1

Debt B
3% per annum $500 repayment
Value at the
Month Value at the Start Interest Contribution End
1 $24,000.00 $60.00 $500.00 $23,560.00
2 $23,560.00 $58.90 $500.00 $23,118.90
3 $23,118.90 $57.80 $500.00 $22,676.70
4 $22,676.70 $56.69 $500.00 $22,233.39
5 $22,233.39 $55.58 $500.00 $21,788.97
6 $21,788.97 $54.47 $500.00 $21,343.44
7 $21,343.44 $53.36 $500.00 $20,896.80
8 $20,896.80 $52.24 $500.00 $20,449.05
9 $20,449.05 $51.12 $500.00 $20,000.17
10 $20,000.17 $50.00 $500.00 $19,550.17
11 $19,550.17 $48.88 $500.00 $19,099.04
12 $19,099.04 $47.75 $500.00 $18,646.79
13 $18,646.79 $46.62 $500.00 $18,193.41
14 $18,193.41 $45.48 $500.00 $17,738.89
15 $17,738.89 $44.35 $500.00 $17,283.24
16 $17,283.24 $43.21 $500.00 $16,826.45
17 $16,826.45 $42.07 $500.00 $16,368.51
18 $16,368.51 $40.92 $500.00 $15,909.43
19 $15,909.43 $39.77 $500.00 $15,449.21
20 $15,449.21 $38.62 $500.00 $14,987.83
21 $14,987.83 $37.47 $500.00 $14,525.30
22 $14,525.30 $36.31 $500.00 $14,061.61
23 $14,061.61 $35.15 $500.00 $13,596.77
24 $13,596.77 $33.99 $500.00 $13,130.76
Initially Received Total Repaid
$24,000 -$12,000

Debt C
4% per annum Compound yearly
Year Value at the start Interest Value at the end
1 $24,000 $960.00 $24,960.00
2 $24,960.00 $998.40 $25,958.40
Initially Received
$24,000
102090 Assignment 1

Investment 1
8% per annum $500 contribution
Value at the
Month Value at the Start Interest Contribution End
1 $0.00 $0.00 $500.00 $500.00
2 $500.00 $3.33 $500.00 $1,003.33
3 $1,003.33 $6.69 $500.00 $1,510.02
4 $1,510.02 $10.07 $500.00 $2,020.09
5 $2,020.09 $13.47 $500.00 $2,533.56
6 $2,533.56 $16.89 $500.00 $3,050.45
7 $3,050.45 $20.34 $500.00 $3,570.78
8 $3,570.78 $23.81 $500.00 $4,094.59
9 $4,094.59 $27.30 $500.00 $4,621.89
10 $4,621.89 $30.81 $500.00 $5,152.70
11 $5,152.70 $34.35 $500.00 $5,687.05
12 $5,687.05 $37.91 $500.00 $6,224.96
13 $6,224.96 $41.50 $500.00 $6,766.46
14 $6,766.46 $45.11 $500.00 $7,311.57
15 $7,311.57 $48.74 $500.00 $7,860.32
16 $7,860.32 $52.40 $500.00 $8,412.72
17 $8,412.72 $56.08 $500.00 $8,968.80
18 $8,968.80 $59.79 $500.00 $9,528.60
19 $9,528.60 $63.52 $500.00 $10,092.12
20 $10,092.12 $67.28 $500.00 $10,659.40
21 $10,659.40 $71.06 $500.00 $11,230.46
22 $11,230.46 $74.87 $500.00 $11,805.33
23 $11,805.33 $78.70 $500.00 $12,384.03
24 $12,384.03 $82.56 $500.00 $12,966.59
Total Paid
-$12,000
102090 Assignment 1

Investment 2
4% per annum Compund Monthly
Value at the
Month Value at the start Interest end
1 $12,000 $40.00 $12,040.00
2 $12,040.00 $40.13 $12,080.13
3 $12,080.13 $40.27 $12,120.40
4 $12,120.40 $40.40 $12,160.80
5 $12,160.80 $40.54 $12,201.34
6 $12,201.34 $40.67 $12,242.01
7 $12,242.01 $40.81 $12,282.82
8 $12,282.82 $40.94 $12,323.76
9 $12,323.76 $41.08 $12,364.84
10 $12,364.84 $41.22 $12,406.05
11 $12,406.05 $41.35 $12,447.41
12 $12,447.41 $41.49 $12,488.90
13 $12,488.90 $41.63 $12,530.53
14 $12,530.53 $41.77 $12,572.30
15 $12,572.30 $41.91 $12,614.20
16 $12,614.20 $42.05 $12,656.25
17 $12,656.25 $42.19 $12,698.44
18 $12,698.44 $42.33 $12,740.77
19 $12,740.77 $42.47 $12,783.24
20 $12,783.24 $42.61 $12,825.85
21 $12,825.85 $42.75 $12,868.60
22 $12,868.60 $42.90 $12,911.50
23 $12,911.50 $43.04 $12,954.53
24 $12,954.53 $43.18 $12,997.72
Initial Lent
-$12,000
102090 Assignment 1

Investment 3
5% per annum $500 repayment
Value at the
Month Value at the Start Interest Contribution End
1 $24,000.00 $80.00 $500.00 $23,580.00
2 $23,580.00 $78.60 $500.00 $23,158.60
3 $23,158.60 $77.20 $500.00 $22,735.80
4 $22,735.80 $75.79 $500.00 $22,311.58
5 $22,311.58 $74.37 $500.00 $21,885.95
6 $21,885.95 $72.95 $500.00 $21,458.91
7 $21,458.91 $71.53 $500.00 $21,030.44
8 $21,030.44 $70.10 $500.00 $20,600.54
9 $20,600.54 $68.67 $500.00 $20,169.21
10 $20,169.21 $67.23 $500.00 $19,736.44
11 $19,736.44 $65.79 $500.00 $19,302.22
12 $19,302.22 $64.34 $500.00 $18,866.57
13 $18,866.57 $62.89 $500.00 $18,429.45
14 $18,429.45 $61.43 $500.00 $17,990.89
15 $17,990.89 $59.97 $500.00 $17,550.86
16 $17,550.86 $58.50 $500.00 $17,109.36
17 $17,109.36 $57.03 $500.00 $16,666.39
18 $16,666.39 $55.55 $500.00 $16,221.94
19 $16,221.94 $54.07 $500.00 $15,776.02
20 $15,776.02 $52.59 $500.00 $15,328.60
21 $15,328.60 $51.10 $500.00 $14,879.70
22 $14,879.70 $49.60 $500.00 $14,429.30
23 $14,429.30 $48.10 $500.00 $13,977.40
24 $13,977.40 $46.59 $500.00 $13,523.99
Initially Lent Total Received
-$24,000 $12,000

Investment 4
$3000 per six months One-off profit $13500
Total Paid Received
-$12,000 $13,500
102090 Assignment 1
102090 Assignment 1

Unit Assessment for Annuities

(24 Marks)
Use the future value interest factors table to answer the first two questions.

Period Interest
1% 2% 3% 4% 5%
1 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.0100 2.0200 2.0300 2.0400 2.0500
3 3.0301 3.0604 3.0909 3.1216 3.1525
4 4.0604 4.1216 4.1836 4.2465 4.3101

1. If you invest $700 at the end of every year at an interest rate 3% per annum,
the amount in your investment account at the end of the fourth year will be
_____.

A. $2800
B. $2928.52
C. $2885.12
D. $2815.12

2. In order to receive a $6000 loan in 3 months at 2% per month, you need to

contribute the equal amount of _____ every month.

A. $2955.67
B. $1875.96
C. $1960.53
D. $2000

3. If you save $5000 in your account for 4 year at 5% per annum, you will have
_____ at the end of year 4.

A. $20000
B. $21550.5
C. $6083.26
D. $6077.53
102090 Assignment 1

4. In order to receive a $10000 loan in after 4 years at 2% per year, you need to
deposit _____ now.
A. $2500
B. $9238.45
C. $2426.24
D. $9546.88

5. Tom borrowed a loan of $24000 at 3% per annum, the repays equal amount
of $4000 every year, after 3 years, he still have _____ cash in his hands for
this loan.
A. $12000
B. $20000
C. $12851.80
D. $11636.4
102090 Assignment 1

6. Mike purchase an annuity product 3 years ago at 3% per annum, which

required him to pay a fixed amount every year. As the result, he has $50000
in his investment account now.
Then his friend Jason wants to borrow this $50000 from him at the same
interest rate, and will repay all the amount to him in 3 years.
a. What is the yearly contribution amount that Mike paid in the last 3
year?
b. If Jason decide to repay the debt at the end of year 3, what will be the
amount that he has to repay?
c. If Jason decide to repay the $13000 to Mike at the end of every year,
and repaid the remaining amount at the end of year 3, what will be
amount of the yearly repayment? (Hint: you need to calculate the
value at the start, the interest for the year, and the value at the end
for your repayment.)
d. Instead of using a one-off repayment in question b., what much
money will Jason save if he adopt the yearly repayment method in
question c.?

102090 Assignment 1

7. A superannuation requires you to pay $12000 every year, the current

nominal interest rate is 6% per annum.
a. Proof that the future value interest factor for 3 years at 6% is 3.1836.
b. Calculate the amount of money you will have in 3 years.
c. If the superannuation requires you to pay $12000 per year in a
monthly base, what will be the value after 3 months (hint: you need
to convert the year interest rate to monthly rate).
d. Given that the future value interest factor for 36 periods at 0.5%
interest is 39.3361. Comment on the impact of contribution frequency
on the value of the superannuation for 3 years.

End of Exam.
102090 Assignment 1

Answer and Marking Guide

Multiple Choice Questions (1 mark each)
1 B
2 C
3 D
4 B
5 A

Short Answers
6.
a) 2 marks
Identify the correct future value interest factor to use 1 mark
Use the right operation (dividing) 1 mark
Answer:
The future value interest factor for 3 years at 3% per annum is 3.0909.
The yearly contribution is: $50000 3.0909 = $16176.52

b) 1 mark
Use the right formula for compound interest 1 mark
Answer:
$50000 (1 + 0.03)3 = $54636.35

c) 3 marks
correct calculation of the amount at the start, the end,
1 mark
and the interest for year 1
correct calculation of the amount at the start, the end,
1 mark
and the interest for year 2, using the value from year 1
correct calculation of the amount at the start, the end,
1 mark
and the interest for year 3, using the value from year 2
Answer:
At the
start Interest Repayment At the end
$50,000.00 $1,500.00 $13,000.00 $38,500.00
$38,500.00 $1,155.00 $13,000.00 $26,655.00
$26,655.00 $799.65 $13,000.00 $14,454.65
102090 Assignment 1

d) 3 marks
List the total amounts repaid for both methods 1 mark
Calculate the amount saved based on the listed amounts 1 mark
Provide reasoning for the difference 1 mark
Answer:
For the yearly repayment method, Jason has to repay $13000 3 +
$14454.65 = $53454.65.
For the one-off repayment method, Jason has to repay $54636.35.
If Jason repay the debt yearly, he will save $54636.35 $53454.65 =
$1181.70.
This is because the yearly repayment reduce the principal every year, so that
the interest on principal is less.

7.
a) 2 marks
Knowing to use the recurrent relation 1 mark
Correct calculation to proof the statement 1 mark
Answer:
Year 1 1
Year 2 1 x 1.06 + 1 = 2.06
Year 3 2.06 x 1.06 + 1 = 3.1836

b) 1 mark
Use the future value interest factor in a right way 1 mark
Answer:
$12000 3.1836 = $38203.20

c) 3 marks
Convert the monthly contribution and interest correctly 1 mark
correct calculation of the amount for month 2, using the
1 mark
value from month 1
correct calculation of the amount for month 3, using the
1 mark
value from month 2
Answer:
Monthly contribution: $12000/12=$1000, monthly rate: 6%/12=0.5%
Month 1 $1000
Month 2 $1000*1.005 + $1000 = $2005
Month 3 $2005*1.005 + $1000 = $2016.03
102090 Assignment 1

d) 3 marks
Calculate the value for monthly contribution 1 mark
Calculate the difference between the listed value 1 mark
Provide reasoning for the difference 1 mark
Answer:
If the superannuation takes monthly contribution, the value after 3 years will
be $1000 x 39.3361 = $39336.10.
Compare to the value for the yearly contribution, $38203.20, the monthly
contribution will result in $39336.10 - $38203.20 = $1132.90 more money.
This is because the increase in compound frequency of interest will result in a
high interest.
102090 Assignment 1

Justification
This teaching sequence is design to deliver the content of MS-F5 Annuities in the
Year 12 Mathematics Standard 2 syllabus (NSW Education Standard Authority,
2017). It is assumed that the learners of this unit have completed and obtained
adequate knowledge from MS-F4 Investments and Loans. This unit will extend
students knowledge in financial mathematics by involving annuities, such as
superannuation and home loan. As prescribed by the syllabus, students should be able
to identify annuities and perform calculation of annuities both digitally and mentally.

Based on the syllabus and contemporary researches, I designed eight sequential

lessons, one homework assignment and one exam for this unit. The first lesson
introduce the concept of annuities. The second lesson introduce the idea of recurrent
relation to prepare students for the annuity calculation. The third, fourth and fifth
lesson will develop students skills in calculating and investigating the value of
annuities using the software Excel. These skills are required not only by the syllabus
but also in real world financial industry. After 5 lessons in the first week, a homework
assignment it designed to assess students learning outcomes for both the annuities
and the other financial instruments. The sixth lesson focus on the annuity calculation
using future value interest factors table. In the seventh lesson, I will invite a financial
expert to the class to provide students with an insight of the financial industry. As
suggested by Pournara (2014), the theoretical calculation of annuities is inadequate to
solve some complex real world scenarios. He also mentioned that learners should be
given access to the real world finance (Pournara, 2013). Although the industrial
insight is not prescribed in the syllabus, it will make student aware of the discrepancy
between the theories and their real-world applications, which is beneficial for
students future development. The last lesson is an in-class exam for the whole unit.

The lesson plan is for the sixth lesson, which is designed to deliver the content
ACMGM100 to students. At the beginning of this lesson, students will recall their
knowledge of annuities calculation using the recurrent relation, which is an essential
concept for this unit. In the teaching activity 1, students will construct the future value
interest factors table in groups. There are two reason for designing this activity. First,
although calculating the value of annuities can be easily done by following the
102090 Assignment 1

procedures, researchers suggests that students can apply the procedure more
effectively and efficiently if they have a conceptual understanding of the procedure
(DeCaro, 2016). The purpose of this activity is to develop students conceptual
understanding about the future value interest factor table by leading them to construct
the table by themselves. Second, the use of jigsaw cooperation technique can not only
increase the efficiency of class work, but also increase the level of engagement by
changing students attitude to mathematics classes (Sengul and Katranci, 2013). In the
teaching activity 2, I will demonstrate procedural knowledge of annuity calculation
using the table. In the third teaching activity, the Travel Game is designed for students
to take the place of traditional exercises. According to researchers, game-based
classrooms will increase the engagement significantly by changing the learning
environment and students attitude to mathematics lessons (Afari et al., 2013). Thus
the Travel Game is a more effective exercise activity compare to traditional pen-and-
paper exercises. At the conclusion part of the lesson, students have the opportunity to
reflect on their performance in the game, which can consolidation their knowledge.

The homework assignment simulates the real world scenario of arbitrage in finance,
which make students have an insight of the real world application of annuities. This
assignment assess students understanding in annuities, the idea of recurrent relation,
skills for Excel, and mathematical reasoning, which are the expected outcomes of this
unit according to the syllabus.

The unit exam assess students comprehensive knowledge in the whole financial
mathematics topic. The first 5 multiple choice questions assess students competence
in comparing and contrasting between annuities and regular loans. The question 6
assess students substance understandings of the annuities, which is that the
instalment of annuities loans actually reduce the principal. The question 7 assess
students understanding of recurrent relation, their conceptual understanding of the
future value interest factors, and the effect of change in contribution frequency.

This unit is an extension to the MS-F4, thus the knowledge from the previous unit is
prerequisite when teaching this unit and assessed in the assignment and exam of this
unit. In addition to the syllabus, students real world industrial insight is developed
after the study of this unit.
102090 Assignment 1

References

Afari, E., Aldridge, J. M., Fraser, B. J. & Khine, M. S. (2013). Students Perceptions of
the Learning Environment and Attitudes in Game-Based Mathematics
Classrooms. Learning Environ Res, 16, 131-150. DOI: 10.1007/s10984-012-
9122-6.
DeCaro, M. S. (2016). Inducing Mental Set Constrains Procedural Flexibility and
Conceptual Understanding in Mathematics. Mem Cogn, 44, 1138-1148. DOI:
10.3758/s13421-016-0614-y
NSW Education Standards Authority (2017). MS-F5 Annuities. Year 12 Mathematics
Standard 2 Syllabus. Retrieved from
http://syllabus.nesa.nsw.edu.au/mathematics-standard-
stage6/content/1310/.
Pournara, C. (2013). Teachers knowledge for teaching compound interest.
Pythagoras, 34(2), 1-10. DOI: 10.4102/pythagoras.v34i2.238.
Pournara, C. (2014). Mathematics-for-Teaching: Insights from the Case of Annuities.
Pythagoras, 35(1), 1-12. DOI: 10.4102/ pythagoras.v35i1.250.
Sengul, S. & Katranci, Y. (2013). Effects of Jigsaw Technique on Seventh Grade
Primary School Students Attitude towards Mathematics. Procedia - Social
and Behavioural Sciences, 116, 339 344. DOI:
10.1016/j.sbspro.2014.01.218.