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CORE, FUR1 2017 VCAA 22 MC

Consider the graph below.
 

 
This graph could show the value of

  1. a piano depreciating at a flat rate of 6% per annum.
  2. a car depreciating with a reducing balance rate of 6% per annum.
  3. a compound interest investment earning interest at the rate of 6% per annum.
  4. a perpetuity earning interest at the rate of 6% per annum.
  5. an annuity investment with additional payments of 6% of the initial investment amount per annum.
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`B`

Show Worked Solution

`text(Consider the change in the)\ y text(-values:)`

`7000 xx 0.94` `= 6580`
`6580 xx 0.94` `= 6185.20`
`…\ \ text(and so on)`

 

`:.\ text(The asset is depreciating at 6% p. a. on a reducing)`

`text(balance basis.)`

`=> B`

CORE, FUR1 2016 VCAA 21 MC

Juanita invests $80 000 in a perpetuity that will provide $4000 per year to fund a scholarship at a university.

The graph that shows the value of this perpetuity over a period of five years is
 

 

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`B`

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`text(A perpetuity lasts indefinitely by only)`

`text(paying out interest.)`

`:.\ text(The graph should show a value that)`

`text(does not change over the years.)`

`=> B`