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0580/22 Feb/Mar 2022, Question 12: Simple Interest

Cambridge IGCSE Mathematics 0580 · Paper 22 (Extended) · Calculator · 6 marks

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The question, in short

Compare two $700 investments: one at 2.5% simple interest over 6 years, another at r% compound interest over 17 years reaching $1030.35; find the final value and the rate.

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Part (a) · 3 marks

Calculate the value of Sanjay's $700 investment after 6 years with 2.5% simple interest per year.

  1. 1Interest = 700 × 2.5/100 × 6 = 105
  2. 2Value = 700 + 105 = $805

Answer805

Part (b) · 3 marks

Given Meera's $700 grows to $1030.35 in 17 years at r% compound interest, find r.

  1. 1700 × (1 + r/100)¹⁷ = 1030.35
  2. 2(1 + r/100)¹⁷ = 1030.35 ÷ 700
  3. 31 + r/100 = (1030.35 ÷ 700)^(1/17) = 1.023
  4. 4r = 2.3

Answer2.3

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