Back to the full dot-point answer
NSWMaths Standard 2Quick questions
Year 12: Financial Mathematics
Quick questions on Annuity tables and the present value of an annuity for HSC Maths Standard 2
3short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What are a loan is the present value of its repayments?Show answer
The clearest place this idea shows up is a loan. When a bank lends you money today, the amount it hands over is exactly the present value of all the repayments you promise to make. The lender is happy with this, because those future repayments, discounted at the loan rate, are worth exactly what they gave you now. So for a reducing-balance loan (one paid off by equal instalments),
What is two tables, one method?Show answer
There are two annuity tables and they are easy to confuse, so fix the difference firmly.
What is converting an annual rate to the per-period row?Show answer
Tables are labelled by the rate and the count per period, not per year. So when interest is added more than once a year (called sub-annual compounding), you must convert before you read the table, exactly as you do with the formula. Divide the yearly rate by the number of compounding periods in a year to get the column. Multiply the number of years by that same number to get the row.
Have a question we have not covered?
This dot-point answer is short enough that we have not extracted many short questions yet. Read the full dot-point answer or ask Mo, our study assistant, in the chat for follow ups.