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Thread ID: 75000	2006-12-13 02:48:00	Ncea Maths	Dally (6292)	PC World Chat

Post ID	Timestamp	Content	User
506344	2006-12-13 02:48:00	Here is a question form a NCEA Maths paper J has $5000 to invest for two and a half years Two schemes to choose from Scheme 1 - Invest the money in an account that pays 3.25% interest only at the end of each year Scheme 2 - Invest the money in an account that pays 1.3% interest at the end of each six months The question asked which would be the best scheme? Now ordinarily this is a easy question except that it is open to more than one interpretation My query is why do the people who set these questions not see the ambiguities.	Dally (6292)
506345	2006-12-13 03:18:00	This is the way that I would have worked it, given the information provided. Scheme One: 3.25% of 5000 is 162.5 This is interest for 1 year Multiply that by 2.5 and You get 406.25 in interest over 2.5 years. Scheme Two: 1.3% of 5000 is 65 This is interest for 0.5 of a year Multiply that by 5 and you get 325 interest in 2.5 years. Therefore scheme 1 would be better. It seemed fairly clear to me. Then again, I may have missed somthing.	Sherman (9181)
506346	2006-12-13 03:18:00	:) Dally, I am assuming this question came from a Level 2 Maths paper. If so, the students are expected to be able to handle Compound Interest questions. It would seem to me to have come from a paper on Sequences and Series If that is the case, I would use the formula A = P(1 + r/100)^n . A is the final amount, P is the sum invested, r is the rate of interest in % and n is the number of interest periods. (a) If r = 3.25 % per year, n = 2.5 and I get A = $5416.21 (b) If r = 1.3 % each 6 months, n = 5 and I get A = $5333.56 I hope I haven't misinterpreted your question. Jim	Hhel (8073)
506347	2006-12-13 03:47:00	IIRC, it was Level one, unless there was a similar question in that paper (i never remember the content of my exams :p )	Dannz (1668)
506348	2006-12-13 04:07:00	:) Dally, I am assuming this question came from a Level 2 Maths paper. If so, the students are expected to be able to handle Compound Interest questions. It would seem to me to have come from a paper on Sequences and Series If that is the case, I would use the formula A = P(1 + r/100)^n . A is the final amount, P is the sum invested, r is the rate of interest in % and n is the number of interest periods. (a) If r = 3.25 % per year, n = 2.5 and I get A = $5416.21 (b) If r = 1.3 % each 6 months, n = 5 and I get A = $5333.56 I hope I haven't misinterpreted your question. Jim I got the same results, assuming that the interest was compounding. Sherman appears to have assumed that it did not compound, but the real issue is whether or not any interest would be paid on the last six months of scheme 1, because the question clearly states that interest is paid only at the end of each year (the devil is in the detail). Since the term was ostensibly 2.5 years (early withdrawal), Option 1 would return just $5330.28 and the bank would get free use of the money for the last six months of the 30 month term. On that basis the second scheme would be ahead by $3.28 (whoopee do!) However, if the Bank ignored its "term" conditions and paid interest on the part year, then the first option would be better at $5416.89. Knowing Banks, the lender would probably be killed by a flying pig as they went to collect their ill-gotten capital gains. Yes indeed, ambiguity abounds! Cheers Billy 8-{)	Billy T (70)
506349	2006-12-13 04:09:00	Scheme 1 (3.25%, paid anually): Start: $5000 After 1 year, interest on $5000 is $162.50 (5000*0.0325), balance now $5162.50. After 2 years, interest on $5162.50 is $167.78 (5162.5*0.0325), balance now $5330.28. As the money is withdrawn before interest is paid on the third year, $5330.28 is the final balance. Scheme 2 (1.3%, paid bianually) Start: $5000 After 6 months, interest on $5000 is $65 (5000*0.013), balance now $5065. After 12 months, interest on $5065 is $65.85 (5065*0.013), balance now $5130.85. After 18 months, interest on $5130.85 is $66.70 (5130.85*0.013), balance now $5197.55. After 24 months, interest on $5197.55 is $67.57 (5197.55*0.013), balance now $5265.12. After 30 months, interst on $5265.12 is $68.45 (5265.12*0.013(, balance now $5333.57. The money is withdrawn, $5333.57 is the final balance. Scheme 1 (3.25%): $5330.28 Scheme 2 (1.30%): $5333.57 Therefore scheme 2 is the better savings scheme.	Erayd (23)
506350	2006-12-13 04:21:00	I agree with Bletch. It states interest paid either after 1 year or interest paid after 6 months. So how is it open to interpretation? Most banks pay it monthly anyway....	pctek (84)
506351	2006-12-13 04:32:00	NCEA sucks. That's all there is to it.	qazwsxokmijn (102)
506352	2006-12-13 06:02:00	NCEA sucks. That's all there is to it.Too right. Scheme 1 (3.25%, paid anually): Start: $5000 After 1 year, interest on $5000 is $162.50 (5000*0.0325), balance now $5162.50. After 2 years, interest on $5162.50 is $167.78 (5162.5*0.0325), balance now $5330.28. As the money is withdrawn before interest is paid on the third year, $5330.28 is the final balance. Scheme 2 (1.3%, paid bianually) Start: $5000 After 6 months, interest on $5000 is $65 (5000*0.013), balance now $5065. After 12 months, interest on $5065 is $65.85 (5065*0.013), balance now $5130.85. After 18 months, interest on $5130.85 is $66.70 (5130.85*0.013), balance now $5197.55. After 24 months, interest on $5197.55 is $67.57 (5197.55*0.013), balance now $5265.12. After 30 months, interst on $5265.12 is $68.45 (5265.12*0.013(, balance now $5333.57. The money is withdrawn, $5333.57 is the final balance. Scheme 1 (3.25%): $5330.28 Scheme 2 (1.30%): $5333.57 Therefore scheme 2 is the better savings scheme. Yip, I'd say this is the correct answer. I don't see how it's confusing... just read the question carefully and it's straight enough.	techie (7177)
506353	2006-12-13 06:58:00	Thanks Billy - ambiguity does abound and it also does not state whether the investment is on call or term so Bletch if it is a term deposit and the money is withdraw after 2 years the interest is severely affected.	Dally (6292)
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