Question 7

7.1 A company bought machinery costing R80 000. Using the reduced balance method the machinery had a book value of R20 000 after 5 years.

Calculate the rate of depreciation. (3)

7.2 Calculate the effective interest rate if interest is compounded at 5% p.a., compounded quarterly (3)

7.3 Sipho invested R30 000 for 6 years. The investment earned interest at 12% p.a., compounded monthly for the first two years. Thereafter the interest rate changed rate changed to 10.8% p.a., compounded semi-annually for the rest of the period.

Calculate the value of the investment at the end of 6 years. (No other transactions were made on the account.) (4)

7.4 Mary deposited R25 000 into a savings account with an interest rate of 18% p.a., compounded monthly. Mary withdrew R8 000 from the account 2 years after depositing the initial amount. She deposited another R4 000 into this account years after the initial deposit

What amount will Mary have 5 years after making the initial deposit in this account ? (6)

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