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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 2008 VCAA 7 MC

Ernie took out a reducing balance loan to buy a new family home.

He correctly graphed the amount paid off the principal of his loan each year for the first five years.

The shape of this graph (for the first five years of the loan) is best represented by
 

 

 

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 `B`

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`text(A reducing balance means that the amount of)`

♦♦ Mean mark 25%.

`text(interest paid decreases each year, and therefore)`

`text(the amount paid off the principal will not only)`

`text(increase each year, but will do so at an increasing)`

`text(rate.)`

`B\ text(correctly shows this trend.)`

`=>  B`

CORE*, FUR1 2012 VCAA 9 MC

Peter took out a reducing balance loan where interest was calculated monthly. He planned to repay this loan fully, with eight equal monthly payments of $260.

Peter missed the fourth payment, but made a double payment of $520 in the fifth month. He then continued to make payments of $260 for the remaining three months.

Which graph could show the balance of the loan each month over the eight-month period?

 

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`A`

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`text(By elimination,)`

`text(As Peter missed the 4th payment, the balance of the)`

♦♦ Mean mark 20%.

`text(loan will increase after 4 months due to interest.)`

`:.\ text(Eliminate B, C, D and E.)`

`=>  A`