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4024/22 May/Jun 2021, Question 1: Compound Interest

Cambridge O Level Mathematics 4024 · Paper 22 (Calculator) · Calculator · 8 marks

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The question, in short

Solve three money problems: a discounted drill price, a currency exchange with a purchase and conversion back, and comparing simple versus compound interest over 4 years to find who gains more.

Summarised in our own words. Use the official paper for the exact wording and any diagrams.

Part (a) · 2 marks

Find the sale price of a $78 drill after a 15% reduction.

  1. 115% of 78 = 11.70
  2. 278 − 11.70 = $66.30

Answer66.30

Part (b) · 2 marks

Convert $100 to euros at $1 = €0.85, spend €58.99, convert the rest back, and find the dollars left.

  1. 1100 × 0.85 = €85
  2. 285 − 58.99 = €26.01
  3. 326.01 ÷ 0.85 = $30.60

Answer30.60

Part (c) · 4 marks

Compare $3500 at 2.1% simple interest with $3500 at 2% compound interest over 4 years; state who has more and by how much.

  1. 1Pietro: 3500 + 3500 × 2.1/100 × 4 = 3500 + 294 = $3794
  2. 2Eliana: 3500 × 1.02⁴ = $3788.51…
  3. 33794 − 3788.51 = 5.487…
  4. 4Pietro, by $5.49

AnswerPietro and 5.48 or 5.49

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