Amortisation and AnnuitiesExercises containing problems about gradually paying off loans and calculating pension plans. 
This is level 1: Amortisation. Give answers which are amounts of money correct to two decimal places.
This is Amortisation and Annuities level 1. You can also try:
Level 2
InstructionsTry your best to answer the questions above. Type your answers into the boxes provided leaving no spaces. As you work through the exercise regularly click the "check" button. If you have any wrong answers, do your best to do corrections but if there is anything you don't understand, please ask your teacher for help. When you have got all of the questions correct you may want to print out this page and paste it into your exercise book. If you keep your work in an ePortfolio you could take a screen shot of your answers and paste that into your Maths file. 




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Interest  Exercises on compound interest on investments and loans.
Level 1  Amortisation
Level 2  Annuities
Exam Style Questions  A collection of problems in the style of GCSE or IB/Alevel exam paper questions (worked solutions are available for Transum subscribers).
More Financial Maths including lesson Starters, visual aids, investigations and selfmarking exercises.
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See the National Curriculum page for links to related online activities and resources.
These exercises are designed for those who have access to a graphic display calculator (GDC) with a Finance Solver function. It is possible to answer the questions using only a scientific calculator but not easy.
A great way to answer the questions in these exercises without a GDC is by creating a table of interest, payment and balance in a spreeadsheet.
Amortization is is paying off an amount owed over time by making planned, incremental payments of principal and interest. In accounting, amortisation refers to writing off an asset's cost as an expense over its estimated useful life to reduce a company's taxable income.
The word amortise (which can also be spelled amortize) comes from the latin ad mortem meaning 'to death'
The formula to find the payments for amortisation is:
$$ Pmt = PV \times \frac{r(1+r)^n}{(1+r)^n 1} $$It is recommended to use the Finance Solve on your GDC for this topic. [See TINspire Essentials].
These are the variables used in the Finance Solver function:
There is also a function on the GDC that can produce a table showing all the datails of the gradual loan repayment:
These are the variables used in the Amortisation Table function:
The values should be typed into the function in this order:
An annuity is the investment of a lumpsum which provides the fund from which regular withdrawals are made over a fixed time period. The investment earns interest according to the balance of the annuity each time period. The payments may be made weekly, monthly, quarterly, yearly, or at any other regular interval of time.
An annuity which provides for payments for the remainder of a person's lifetime is a life annuity.
It is recommended to use a GDC for your working. See TINspire Essentials for an example of how to use the Finance Solver. Note that PV (present value, the amount of the lumpsum) should be negative and the payments (PMT) should be positive.
The formula for calculating the payments from an annuity is the same as that for an amortisation
Don't wait until you have finished the exercise before you click on the 'Check' button. Click it often as you work through the questions to see if you are answering them correctly. You can doubleclick the 'Check' button to make it float at the bottom of your screen.
Answers to this exercise are available lower down this page when you are logged in to your Transum account. If you don’t yet have a Transum subscription one can be very quickly set up if you are a teacher, tutor or parent.
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