Financial Literacy-Loan Repayments-Calculating Annuity Math Assessment-Revision

Grades: 10th to 12th

Financial Mathematics Problem Solving can be used for:

• Assessment: As a formal task to evaluate student understanding.
• Revision: For targeted practice and review.
• As Exam Question

The marking scheme is editable. Feel free to adjust it to your preferred criteria or school requirements.

Focus Area: Reducing Balance Loans (Loan Repayments)

To assess students’ understanding of reducing balance loan calculations, include:

• Determining the time required to repay a loan based on the interest rate and fixed repayment amount.
• Calculating the monthly repayment needed to pay off a loan within a specified time frame.

Skill Development:

• Applying algebraic techniques to solve financial problems.
• Using geometric progressions to model loan repayments.
• Rounding money to the nearest cent.
• Converting interest rates and time periods between different formats.

Learning Outcomes:

• Use a recurrence relation to model a reducing balance loan and investigate the effect of the interest rate and repayment amount on the time taken to repay the loan.

• Solve problems involving reducing balance loans; for example, determining the monthly repayments required to pay off a loan.

Also comply with Australian Curriculum:

Use a recurrence relation to model a reducing balance loan and investigate (numerically or graphically) the effect of the interest rate and repayment amount on the time taken to repay the loan (ACMGM097)

With the aid of a financial calculator or computer-based financial software, solve problems involving reducing balance loans; for example, determining the monthly repayments required to pay off a housing loan. (ACMGM098)