HSC Together Year 12 Maths Advanced: Compound Interest

#### Maths Advanced

• Functions
• Trigonometric Functions
• Calculus
• Financial Mathematics
• Statistical Analysis
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# Compound Interest

This is part of the HSC Mathematics Advanced course under the topic of Financial Mathematics: Modelling investments and loans.

In this post, we will solve compound interest problems involving financial decisions, including but not limited to a home loan, a savings account, a car loan or superannuation:

• Identify an annuity (present or future value) as an investment account with regular, equal contributions and interest compounding at the end of each period, or a single-sum investment from which regular, equal withdrawals are made
• Use technology to model an annuity as a recurrence relation and investigate (numerically or graphically) the effect of varying the interest rate or the amount and frequency of each contribution or withdrawal on the duration and/or future or present value of the annuity
• Use a table of future value interest factors to perform annuity calculations, eg calculating the future value of an annuity, the contribution amount required to achieve a given future value or the single sum that would produce the same future value as a given annuity

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