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Grades 8–11 · CAPS · Gr 11 Term 3 - Finance, growth and decay

Grade 11 Finance, growth and decay

Depreciation, compound decay, nominal against effective rates, and timelines with changing conditions.

Gr 11 Term 3 - Finance, growth and decayTerm 3 - 2 weeks (CAPS)

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What gets asked

Calculate straight-line and reducing-balance depreciation.
Convert a nominal rate to an effective annual rate.
Track an investment through a rate change or an extra deposit on a timeline.
Decide which of two options is better, with reasons.

You must be able to

Straight-line loses the same rand amount each year; reducing balance the same percentage.
Divide a nominal rate by its compounding periods before compounding it back up.
Move every amount on the timeline to ONE date before comparing or adding.
Keep full calculator precision until the final rounding.

Traps that cost marks

Growing a deposit made in year 3 for the full term. A cash flow only earns from the date it enters: count its periods from there.
Comparing nominal rates with different compounding directly. Convert both to effective annual rates first - that is the common scale.
Using $A = P (1 + i)^{n}$ for a car losing value. Decay uses $1 - i$ : value shrinks by the rate each period.

Worked example

A machine worth R

20000

depreciates at

10%

p.a. on the reducing balance. Value after 2 years?

$A = P (1 - i)^{n} = 20000 (0, 9)^{2}$ .
$(0, 9)^{2} = 0, 81$ .
$A = R 16200$ .

About this material

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