Task1: (a)!Sofie wants to invest $25,000 in a spa that her sister is starting. She will triple her
investment in six years. What is the rate of return that Sofie is being promised?
(Rounded to the nearest per cent.)
(b)!Dominic has $3,000 to invest for three years. He wants to receive $5,000 at the end of
the three years. What invest rate would his investment have to earn to achieve his
goal? (Round to the nearest percent.)
(c)!Your tuition for the coming year is due today. You borrow $8,000 from your uncle
and agree to repay in the three years an amount of $9,250. What is the interest rate on
this loan? Round to the nearest per cent.
(d)!Joan Alexander wants to go on a cruise in three years. She could earn 8.2 percent
compounded monthly in an account if she were to deposit the money today. She needs
to have $10,000 in three years. How much will she have to deposit today? (Round to
the nearest dollar.)
(e)!Rachael wants to borrow $6,000 for a period of four years. She has two choices. Her
bank is offering to lend her the amount at 7.25 percent compounded annually. She can
also borrow from her company and will have to repay a total of $8,130.93 at the end
of four years. Should Rachael go with her bank or the company, and what is the
interest rate if she borrows from her company? (Round to the nearest percent.)
Task 2 (5 marks)
Suppose you win $10 million in a lottery. You have a choice of how you will receive your
winnings. The first choice is to receive a certain lump sum today. The second choice is to
receive a certain amount at the end of five years. How will you evaluate your choices to make
your decision?

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