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NSC / Matric Finance — practice questions

Explore 5 free Finance questions in NSC / Matric Mathematics. Open each question or exercise to read its content, reference answers and available explanation.

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Finance questions and exercises with answers

Showing questions 1–5 of 5.

What is an annuity?Read the answer and worked solution →Equal monthly instalments are paid to settle a home loan over twenty years. Which kind of annuity is that?Read the answer and worked solution →Why does a courier company pay a fixed amount into a sinking fund every month?Read the answer and worked solution →What separates a pyramid scheme from a Ponzi scheme?Read the answer and worked solution →Thandi invests R20 000 at 10 percent per year, compounded yearly. What is her investment worth after three years?Read the answer and worked solution →

Worked practice questions

What is an annuity?

  1. Equal payments at set intervals
  2. One single payment up front
  3. A payment that changes monthly
  4. A payment made only at the end
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Correct answer: A. Equal payments at set intervals

1. An annuity is a run of equal payments made at regular intervals over a fixed term. 2. Interest is charged or earned on the balance while those payments are being made. 3. Saving a fixed amount each month into an investment fund is one example. 4. Repaying a home loan in fixed monthly instalments is another. _Source: Siyavula Mathematics Grade 12 (Everything Maths, CC BY 4.0), Chapter 3: Finance_

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Equal monthly instalments are paid to settle a home loan over twenty years. Which kind of annuity is that?

  1. A future value annuity
  2. A present value annuity
  3. A sinking fund annuity
  4. A pyramid scheme annuity
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Correct answer: B. A present value annuity

1. Ask whether money is being built up for later or paid off from now. 2. A future value annuity builds up a balance through regular deposits into a savings fund. 3. A present value annuity pays off a loan or bond whose balance reduces with each instalment. 4. A home loan repaid in equal instalments is therefore a present value annuity. 5. A sinking fund is a savings arrangement, which makes it a future value annuity instead. _Source: Siyavula Mathematics Grade 12 (Everything Maths, CC BY 4.0), Chapter 3: Finance_

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Why does a courier company pay a fixed amount into a sinking fund every month?

  1. To pay the salaries this month
  2. To settle an overdue tax bill
  3. To afford a replacement vehicle
  4. To reduce the price of its fuel
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Correct answer: C. To afford a replacement vehicle

1. Delivery vehicles wear out and lose value as they age and are used. 2. The company will have to buy a new one at a future price that is higher than today's price. 3. Regular deposits into a sinking fund, earning compound interest, build up that future amount. 4. The trade in value of the old vehicle is subtracted from the price of the new one to set the target. 5. Ordinary running costs such as salaries are paid from income, not from a sinking fund. _Source: Siyavula Mathematics Grade 12 (Everything Maths, CC BY 4.0), Chapter 3: Finance_

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