J:tmes Ruse 201.

5 2U T ri:tls

When Robby is 3 months old, his parents decide to make a regular deposit of
$500 every 3 months, starting with first one when Robby is 3 months old in an
account that earns interest of 8%p.a., the interest being paid every 3 months.

(i) Show that the day after Robby's 1st birthday (after payment is made), the value of 2
the account is given by $ 2060.80.

(ii) How much money will be in the account the day when Robby turns 15 after the 2
payment is made?

(iii) No more payments are made into the account after Robby turns 15 and no 1
withdrawals are made.
Find the amount in the account on Robby's 16th birthday.

(iv) Robby decides that he will withdraw a regular amount of money from this 2
account each birthday, starting with his 16th birthday. He cannot decide whether
he should withdraw $4000 or $5000 each birthday.
By considering the result of part (iii), comment on what will happen in each case.
North Sydney Girls 2014' 2U T ri:tls

Susan has planned a holiday which she decides to take in 3 years' time. She has
estimated that the holiday will cost about $8 000 and plans to save a fixed amount
each month. She invests her savings at the beginning of each month in an account
which pays interest at 6% pa compounded monthly.

(i) Let the amount she saves each month be $A and let V,, be the value of her
investment after n months. Show that the value of her investment at the
end of 3 months is given by
V3 =A ( 1.005 +1.005 2 + 1.0053 ). I

(ii) Find correct to the nearest dollar, the least amount of money that Susan
would need to save each month to reach her target. 3

(iii) If, after 2 years of her saving plan, the interest rate rose to 9% pa, how
much extra spending money would Susan have if she maintained the
amount she was saving as calculated in part (ii) above? 3