SEKOLAH MENENGAH KEBANGSAAN

BUKIT KEMUNING
40460 SHAH ALAM

ADDITIONAL MATHEMATICS PROJECT

WORK 2007
FORM 5

FIXED DEPOSIT ACCOUNT AND

INTEREST RATE

Student’s Name : CHIN WYNN

Form : 5 SCIENCE 1

I.C. No. : 910715-14-5397

Teacher’s Name : PN. ONG LIN LIN

 CHIN WYNN

CONTENTS

NO. TITLE PAGE

1. Acknowledgement 2

2. Introduction 3

3. Conjecture 9

4. Discussion 9

5. Identifying Information 11

6. Strategy 12

7. Conclusion 37

8. Attachment 44

9. Appendix 46

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ACKNOWLEDGEMENT

Firstly, I would like to thank our Additional

Mathematics Teacher, Madam Ong Lin Lin for guiding us
throughout this project. She explained and showed us every
contents of this project clearly.

Next, I would like to thank my friends for giving

assistance and advice about this project. Besides that, they
also gave me some mental support to doing this project.

Last but not least, I appreciate that my parents fully

believed and supported me. They sacrificed their time to
send me to my friend’s house in order to complete this
project. They also contributed money for me to carry out
this assignment.

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INTRODUCTION

Our group would like to show our kindness by helping Ang, Bakar and Chandran
to calculate their annual total income as well as the total amount of money they
will receive by saving in the fixed deposit account for the same period of time
but of different interest rate.

The Theory of Interest

Irving Fisher

Biography
Irving Fisher (27 Feb 1867-29 April 1947) was an American economist. his
father was a teacher and congregational minister, and the son was brought up to
believe he must be a useful member of society. Irving had mathematical ability
and a flair for inventing things. A week after he was admitted to Yale
University, his father died at age 53. Irving carried on, however, supporting his
mother, brother, and himself, mainly by tutoring. He graduated from Yale with
B.A. degree in 1888. Irving’s best subject was Mathematics. He went on to write
a doctorial thesis combining both subjects, on mathematical economics which
resulted in his being granted the first Yale Ph. D in economics, in 1891.

While most of Fisher’s energy went into “causes” and business ventures, and the
better part of his scientific effort was devoted to monetary economics, he is
best remembered today for his theory of interest and capital, studies of an
ideal world from which the real world deviated at its peril. His most enduring
intellectual work has been his theory of capital (economics), investment, and
interest rates, first exposited in his 1906 The Nature of Capital and income and
1907 The Rate of Interest. His 1930 treatise, The Theory of Interest, summed
up a lifetime’s work on capital, capital budgeting, credit markets, and the
determinants of interest rates, including the rate of inflation.

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Definition of Fixed Deposit

A bank deposit for a fixed period of time.

A fixed-income debt security, usually issued by banks. A Fixed Deposit is like

loaning the bank your money. In return, they pay you interest.

A specific sum of money deposited in a financial institution for a fixed term

earning a pre-agreed interest rate.

A deposit of money, generally with a bank, finance company or large corporation,

repayable on a certain date. Interest may be payable at regular intervals during
the term of the deposit or on withdrawal.

1. Date of Fixed Deposit

The effective date of Fixed Deposit shall be the date on which the bank gets
funds to its account. No Fixed Deposit Receipt is issued in anticipation of
realisation of the cheque.

2. Auto Renewal

Fixed deposits are accepted with auto-renewal facility at periodicity as opted

by the depositors

3. Fixed Deposit Receipt / Memorandum of Deposit

Fixed Deposit Receipt or Memorandum of Deposit will be issued to account

holder as may be decided by the Bank from time to time for customer
convenience.

4. Tax Deducted at Source

Tax at source is deducted as applicable from the interest on fixed deposit, as

per Income Tax Act, 1961.

5. Payment of Interest on Fixed Deposit

Interest on fixed deposits is reckoned/paid at quarterly intervals, at the rates

applicable at the time of acceptance as the case may be, in accordance with RBI
directives.

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6. Premature closure of Fixed Deposits

In the event of the Fixed Deposit being closed before completing the original
term of deposit, interest will be paid at the rate applicable on the date of
deposit for the period for which the deposit has remained with the Bank. The
deposit may be subject to penal rate of interest as prescribed by the Bank on
the date of deposit.

Definition of Bank

A bank is a commercial or state institution that provides financial services,

including issuing money in form of coins, banknotes or debit cards, receiving
deposits of money, lending money and processing transactions. A commercial
bank accepts deposits from customers and in turn makes loans based on those
deposits. Some banks (called Banks of issue) issue banknotes as legal tender.
Many banks offer ancillary financial services to make additional profit; for most
banks also rent safe deposit boxes in their branches.

Currently in most jurisdictions commercial banks are regulated and require

permission to operate. Operational authority is granted by bank regulation bank
regulatory authorities and provide rights to conduct the most fundamental
banking services such as accepting deposits and making loans. A commercial bank
is usually defined as an institution that accepts both deposits and makes loans;
there are also financial institutions that provide selected banking services
without meeting the legal definition of a bank. Banks have influenced economies
and politics for centuries. The primary purpose of a bank was to provide loans to
trading companies. Banks provide funds to allow businesses to purchase
inventory, and collected those funds back with interest when the goods were
sold. For centuries, the banking industry only dealt with businesses, not
consumers. Commercial lending today is a very intense activity, with banks
carefully analysing the financial condition of its business clients to determine
the level of risk in each loan transaction. Banking services have expanded to
include services directed at individuals and risk in these much smaller
transactions are pooled.

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A bank generates a profit from the differential between what level of interest
it pays for deposits and other sources of funds, and what level of interest it
charges in its lending activities. This difference is referred to as the spread
between the cost of funds and the loan interest rate. Historically, profitability
from lending activities has been cyclic and dependent on the needs and
strengths of loan customers. In recent history, investors have demanded a more
stable revenue stream and banks have therefore placed more emphasis on
transaction fees, primarily loan fees but also including service charges on array
of deposit activities and ancillary services (international banking, foreign
exchange, insurance, investments, wire transfers, etc.). However, lending
activities still provide the bulk of a commercial bank's income.

The name bank derives from the Italian word banco, desk, used during the
Renaissance by Florentines bankers, who used to make their transactions above
a desk covered by a green tablecloth.

Moral Values

• Responsibility: The society should keep their money in the bank because the
bank is the safest and the most reliable place to store cash. By keeping
money in the bank, people will get an interest rate and their money grows.
The money will not get stolen easily and people will feel secure.

• Work opportunities: Having a bank will provide more work opportunities for
unemployed people. This will also increase the economic rate of the country.
Sooner or later the value of the ringgit will increase and will stand proudly
next to the dollar and the Euro.

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ADDITIONAL MATHEMATICS PROJECT WORK 2007

FORM 5

Ang, Bakar and Chandran are friends and they have just graduated from a
local university. Ang works in a company with a starting pay of RM2000 per
month. Bakar is a sales executive whose income depends solely on the
commission he receives. He earns a commission of RM1000 for his first month
and this commission increases by RM100 for each subsequent month. On the
other hand, Chandran decides to go into business. He opens a café and makes a
profit of RM100 in his first month. For the first year, his profit in each
subsequent month is 50% more than that of the previous month.

In the second year, Ang receives a 10% increment in his monthly pay. On
the other hand, the commission received by Bakar is reduced by RM50 for each
subsequent month. In addition, the profir made by Chandran is reduced by 10%
for each subsequent month.

1. (a) How much does each of them receive at the end of the first year?
(Two or more methods are required for this question.)

(b) What is the percentage change in their total income for the second
year compared to the first year? Comment on the answers.

(c) Ang, Bakar and Chandran, each decided to open a fixed deposit
account of RM10 000 for three years without any withdrawal.
• Ang keeps the amount at an interest rate of 2.5% per annum
for a duration of 1 month renewable at the end of each
month.
• Bakar keeps the amount at an interest rate of 3% per annum
for a duration of 3 months renewable at the end of every 3
months.
• Chandran keeps the amount at an interest rate of 3.5% per
annum for a duration of 6 months renewable at the end of
every 6 months.

(i) Find the total amount each of them will receive after 3
years.

(ii) Compare and comment on the difference in the interests

received. If you were to invest RM10 000 for the same

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period of time, which fixed deposit account would you

prefer? Give your reasons.

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Further Exploration

2. (a) When Chandran’s first child, Johan is born, Chandran invested

RM300 for him at 8% compound interest per annum. He continues
to invest RM300 on each of Johan’s birthday, up to and including
his 18th birthday. What will be the total value of the investment on
Johan’s 18th birthday?

(b) If Chandran starts his investment with RM500 instead of RM300

at the same interest rate, calculate on which birthday will the total
investment be more than RM25 000 for the first time.

Note: Compound interest is the interest earned during a period calculated on

the basis of the original sum together with interest earned from the
previous periods.

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CONJECTURE

Our group predicts that a fixed deposit account of RM10 000 for 3 years
without any withdrawal will earn a higher interest if the investment plan offers
a higher interest rate per annum. Hence, Chandran should receive the highest
total amount of money after 3 years.

DISCUSSION

By using mathematical facts, formulae and methods such as arithmetic

progression, geometric progression, listing and counting, different types of
interests such as simple interest and compound interest can be calculated.
Furthermore, diagrams, tables and graphs are also inserted to help presenting
the data and information. Also, all answers in this folio are in at least 4
significant figures.

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Mathematical Facts and Formulae that are used

Types of Interest

Simple Interest
Simple interest is the product of the principal, the interest rate (per period),
and the number of time periods.
To find the simple interest: c = prt, where c (simple interest) is found as the
product of p (principal), r (rate) and t (time). For example, Catherin borrows
RM23 000 to buy a new car, and the rate is 5.5% over five years. What is the
resulting simple interest?

RM23 000 x 5.5% x 5 = RM6325

* The simple interest on Cat’s auto loan is RM6325. If Cat repays his debt
in full, he will repay RM29 325.

Compound Interest
Compound interest is very similar to simple interest. The difference is that the
principal changes with every time period, unlike simple interest, where the
principal remains the same. The new principal at the end of every time period is
essentially the simple interest on the principal at the beginning of the time
period, added to the principal.

Progression

Arithmetic Progression (A.P.)

Tn = a + (n - 1) d

Sn = n [ 2a + (n – 1) d ]
2

Geometric Progression (G.P.)

Tn = arn - 1

Sn = a ( r – 1 )
n

r–1

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IDENTIFYING INFORMATION

• To find the interest rate.

• To find out the best fixed deposit account.
• The importance of fixed deposit account.

Question 1(a)
To determine how much each of them receive at the end of the first year.

Question 1(b)
To investigate the percentage change in their total income for the second year
compared to the first year.

Question 1(c)(i)
To determine the amount each person will receive after three years.

Question 1(c)(ii)
To identify the difference in the interest received and the best fixed deposit
account.

Further Exploration

Question 2(a)
To determine the total value of the investment on Johan’s 18th birthday.

Question 2(b)
To investigate on which birthday the total investment will be more than
RM25 000.

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STRATEGY

1. (a) How much does each of them receive at the end of the first year?
(Two or more methods are required for this question.)

Method 1: Listing and Manual Calculation

Ang’s salary is constant throughout the first year, which is RM2000 per month.
Bakar earns RM1000 for the first month and it increases by RM100 for each
subsequent month.
Chandran makes a profit of RM100 in the first month and it increases by 50%
compared to the previous month.

Year 1 Ang (RM) Bakar (RM) Chandran (RM)

Jan 2000.0000 1000.0000 100.0000
Feb 2000.0000 1100.0000 150.0000
Mar 2000.0000 1200.0000 225.0000
Apr 2000.0000 1300.0000 337.5000
May 2000.0000 1400.0000 506.2500
Jun 2000.0000 1500.0000 759.3750
Jul 2000.0000 1600.0000 1139.0625
Aug 2000.0000 1700.0000 1708.5938
Sep 2000.0000 1800.0000 2562.8907
Oct 2000.0000 1900.0000 3844.3361
Nov 2000.0000 2000.0000 5766.5042
Dec 2000.0000 2100.0000 8649.7563
Total (2 d.p.) 24000.00 18600.00 25749.27
Table 1: Income received by Ang, Bakar and Chandran in the first year

Method 2: Arithmetic Progression (A.P.) and Geometric Progression (G.P.)

Total income received by Ang at the end of the first year

The salary is same throughout the year, therefore the total income at the end
of the first year = RM2000 x 12 = RM24 000.00

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Total income received by Bakar at the end of the first year

Since Bakar earns a commission of RM1000 for the first month and his
commission increases by RM100 for each subsequent month, his monthly
commission could be arranged in a number sequence according to the ascending
order of the months.

RM1000, RM1100, RM1200, ...... (A.P.)

Hence, his total commission at the end of the first year could be
calculated using arithmetic progression (A.P.).

a = RM1000
d = RM1100 – RM1000
= RM100

Sn = n [ 2a + ( n- 1 ) d ], where n = number of months

2

S12 = 12 [ 2 (1000) + ( 12 – 1 ) ( 100 ) ]

2
= 6 [ 2000 + 11 ( 100 ) ]
= 6 ( 2000 + 1100 )
= 6 ( 3100 )
= RM18 600.00

Nevertheless, the calculations above have shown that Bakar receives a

total of RM18 600.00 at the end of the first year.

Total income received by Chandran at the end of the first year

Since Chandran makes a profit of RM100 in the first month and his profit
increases by 50% more than that of the previous month in each
subsequent month, the profits he made in the second, third or the
following months could be calculated using the following formulae.

Profit in nth month = Profit in ( n – 1 )th month + [ 50% x Profit in ( n – 1 )th month]

Profit made in 1st month = RM100 (stated in question)

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Profit made in 2nd month = RM100 + ( 50% x RM100 )

= RM100 + RM50
= RM150

Profit made in 3rd month = RM150 + ( 50% x RM150 )

= RM150 + RM75
= RM225

From the calculations above, a number sequence of profits made by Chandran

according to the ascending order of the months could be formed.

RM100, RM150, RM225, ...... (G.P.)

Hence, his total profit at the end of the first year could be calculated
using geometric progression (G.P.).

a = RM100
r = RM225
RM150
= 1.5

Sn = a ( r – 1 ), where n = number of months

n

r–1

S12 = 100 [ ( 1.5 ) – 1 ]

12

1.5 – 1

= 100 [ ( 1.5 ) – 1 ]
12

0.5
= RM25 749.27 (2 d.p.)

Henceforth, the calculations above have shown that Chandran receives a

total of RM25749.27 at the end of the first year.

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1. (b) What is the percentage change in their total income for the second
year compared to the first year? Comment on the answers.

Method 1: Listing and Manual Calculation

Ang’s income increases by 10% in the second year.

Bakar’s income is reduced by RM50 for each subsequent month.
Chandran’s income is reduced by 10% for each subsequent month.

Year 2 Ang (RM) Bakar (RM) Chandran (RM)

Jan 2200.0000 2050.0000 7784.7807
Feb 2200.0000 2000.0000 7006.3026
Mar 2200.0000 1950.0000 6305.6723
Apr 2200.0000 1900.0000 5675.1051
May 2200.0000 1850.0000 5107.5946
Jun 2200.0000 1800.0000 4596.8351
Jul 2200.0000 1750.0000 4137.1516
Aug 2200.0000 1700.0000 3723.4364
Sep 2200.0000 1650.0000 3351.0928
Oct 2200.0000 1600.0000 3015.9835
Nov 2200.0000 1550.0000 2714.3852
Dec 2200.0000 1500.0000 2442.9467
Total (2 d.p.) 26400.00 21300.00 55861.29
Table 2: Income received by Ang, Bakar and Chandran in the 2 year
nd

For Ang, the percentage change

= RM26 400.00 – RM24 000.00 x 100%
RM24 000.00
= +10%

For Bakar, the percentage change

= RM21 300.00 – RM18 600.00 x 100%
RM18 600.00
= +14.52%

For Chandran, the percentage change is

= RM55 861.29 – RM25 749.27 x 100%
RM25 749.27
= +116.94%

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Method 2: Arithmetic Progression (A.P.) and Geometric Progression (G.P.)

Percentage change in Ang’s total income for the second year compared to the
first year

Ang’s new monthly salary = RM2 000 + 10% increase

10
= RM2 000 + ( RM2 000 x )
100
= RM2 000 + RM200
= RM2 200

Total salaries in the 2nd year = RM2 200 x 12

= RM26 400

From the calculations above, Ang earns a total of RM26 400.00 in his second
year where he receives an increment of 10% in his monthly pay.

The following formulae could be used to calculate the percentage change in his
total income for the second year compared to the first year.

Percentage change
= Total income in the 2 year – Total income in the 1 year x 100%
nd st

Total income in the 1st year

= RM26 400 – RM24 000 x 100%
RM24 000
= RM2 400 x 100%
RM24 000
= +10%

As a result, the result above has shown that the total salary earned by
Ang in the second year increased by 10% more than the total salaries in
the first year. Specifically, Ang earns an additional RM2400.00 in the
second year compared to the first year.

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Percentage change in Bakar’s total income for the second year compared
to the first year

The income at the end of the first year:

1000, 1100, 1200, ...... (A.P.)

a = 1000
d = 100
n = 12

T12 = 1000 + ( 12 – 1 ) ( 100 )

= 1000 + 1100
= RM2100.00

Income for the second year:

2050, 2000, 1950, ......

a = 2050
d = -50
n = 12

Sn = 12 [ 2 ( 2050 ) + ( 12 – 1 ) ( -50) ]
2
= RM21 300.00

From the calculations above, Bakar earns a total of RM21 300.00 in his second
year.

Percentage change
= Total income in the 2 year – Total income in the 1 year x 100%
nd st

Total income in the 1st year

= RM21 300 – RM18 600 x 100%
RM18 600
= RM2 700 x 100%
RM18 600
= +14.52%

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As a result, the result above has shown that the total income earned by
Bakar in the second year increased by 14.52% more than the total
income in the first year. Specifically, Bakar earns an additional
RM2700.00 in the second year compared to the first year.

Percentage change in Chandran’s total income for the second year

compared to the first year

The income at the end of the first year:

100, 100 x 1.5, 100 x ( 1.5 )2, … 100 x ( 1.5 )11 (G.P.)

a = 100
r = 1.5
n = 12

T12 = 100 ( 1.5 )11

= RM8649.76

Income for the second year:

T1 = 8649.76 x 0.9 = RM7784.78

7784.78, 7784.78 x 0.9, 7784.78 x ( 0.9 )2, 7784.78 x ( 0.9 )11

a = 7784.78
r = 0.9
n = 12

S12 = 7784.78 [ 1 – ( 0.9)12 ]

1 – 0.9
= RM55 861.28

From the calculations above, Chandran earns a total of RM55 861.28 in his
second year.

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Percentage change
= Total income in the 2 year – Total income in the 1 year x 100%
nd st

Total income in the 1st year

= RM55 861.28 – RM25 749.27 x 100%
RM25 749.27
= RM30 112.01 x 100%
RM25 749.27
= +116.94%

As a result, the result above has shown that the total income earned by
Chandran in the second year increased by 116.94% more than the total
income in the first year. Specifically, Chandran earns an additional
RM30 112.01 in the second year compared to the first year. In general, he
has earned more than twice the amount of the total profit he made in the
first year.

Name 1st year income 2nd year income Percentage change

(RM) (RM) (%)
Ang 24 000.00 26 400.00 + 10
Bakar 18 600.00 21 300.00 + 14.52
Chandran 25 749.27 55 861.29 + 116.94
Table 3: Percentage change in the total income received by Ang, Bakar
and Chandran respectively

1. The change is positive for all 3 of them.

2. Ang has the least increase by a fixed amount of 10%.
3. Chandran’s income increase higher than Bakar’s income because
his increase is by geometric progression, whereas Bakar’s
income increase is by arithmetic progression.

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1. (c) Ang, Bakar and Chandran, each decided to open a fixed deposit
account of RM10 000 for three years without any withdrawal.
• Ang keeps the amount at an interest rate of 2.5% per annum for a
duration of 1 month renewable at the end of each month.
• Bakar keeps the amount at an interest rate of 3% per annum for a
duration of 3 months renewable at the end of every 3 months.
• Chandran keeps the amount at an interest rate of 3.5% per annum
for a duration of 6 months renewable at the end of every 6
months.

(i) Find the total amount each of them will receive after 3 years.

Method 1: Listing and Manual Calculation

For Ang: Interest rate per annum = 2.5%

Renewal period = At the end of each month

For Bakar: Interest rate per annum = 3%

Renewal period = At the end of every 3 months

For Chandran: Interest rate per annum = 3.5%

Renewal period = At the end of every 6 months

Year 1 Ang (RM) Bakar (RM) Chandran (RM)

Investment 10000.0000 10000.0000 10000.0000
Jan 10020.8333
Feb 10041.7100
Mar 10062.6302 10075.0000
Apr 10083.5940
May 10104.6015
Jun 10125.6528 10150.5625 10175.0000
Jul 10146.7479
Aug 10167.8870
Sep 10189.0701 10226.6917
Oct 10210.2973
Nov 10231.5688
Dec 10252.8846 10303.3919 10353.0625
Table 4: Interest received by Ang, Bakar and Chandran in the 1st year

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Year 2 Ang (RM) Bakar (RM) Chandran (RM)

Jan 10274.2448
Feb 10295.6495
Mar 10317.0988 10380.6673
Apr 10338.5928
May 10360.1315
Jun 10381.7151 10458.5223 10534.2411
Jul 10403.3437
Aug 10425.0173
Sep 10446.7361 10536.9612
Oct 10468.5001
Nov 10490.3095
Dec 10512.1643 10615.9884 10718.5903
Table 5: Interest received by Ang, Bakar and Chandran in the 2 year
nd

Year 3 Ang (RM) Bakar (RM) Chandran (RM)

Jan 10534.0646
Feb 10556.0106
Mar 10578.0023 10695.6083
Apr 10600.0398
May 10622.1232
Jun 10644.2526 10775.8254 10906.1656
Jul 10666.4281
Aug 10688.6498
Sep 10710.9178 10856.6441
Oct 10733.2322
Nov 10755.5931
Dec (2 d.p.) 10778.00 10938.07 11097.02
Table 6: Interest received by Ang, Bakar and Chandran in the 3 year
rd

The total amount received by Ang after three years is RM10 778.00.

The total amount received by Bakar after three years is RM10 938.07.

The total amount received by Chandran after three years is

RM11 097.02.

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Method 2: Geometric Progression (G.P.)

The total amount Ang will receive after three years

On top of constructing a table to determine the amount of deposit in

Ang’s fixed deposit account, the geometric progression method could also
be used.

Before that, the amount of deposit in the first few months will have to
be calculated beforehand. Here, the amount of deposit in the first three
months (January, February and March in the first year) is calculated.

Principal amount = RM10 000.00000

Amount of deposit in the 1st month

= RM10 000.00000 + Interest received in the month
1
= RM10 000.00000 + ( RM10 000.00000 x 2.5% x )
12
1
= RM10 000.00000 + ( RM10 000.00000 x )
480
= RM10 020.83333

Amount of deposit in the 2nd month

= RM10 020.83333 + Interest received
1
= RM10 020.83333 + ( RM10 020.83333 x )
480
= RM10 041.71007

With the principal amount, the amount of deposit in the first and second
month, a number sequence could be formed as shown in the following.

RM10 000.00000, RM10 020.83333, RM10 041.71007, …… (G.P.)

To calculate the amount Ang will receive after three years in his fixed
deposit account, geometric progression can now be used.

a = RM 10 000.00000

r = RM 10 020.83333
RM 10 000.00000
= 1.002083333

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T37 (Amount at the end of the 36th month)

Tn = arn – 1, where n = sequence of month

T37 = 10 000 x ( 1.002083333 )36

= RM10 778.00 (2 d.p.)

The result from the calculation above has proven that the total amount
Ang will receive after 3 years is RM10 778.00. He earns an additional
RM778.00 from the interest after keeping RM10 000.00 in his fixed
deposit account without any withdrawal for three years.

The total amount Bakar will receive after three years

The amount of deposit in the first few months will have to be calculated
beforehand. Here, the amount of deposit in the first three months
(March, June and September in the first year) is determined.

Principal amount = RM10 000.00

Amount of deposit in March (1st year)

= RM10 000.00 + Interest received in the month
3
= RM10 000.00 + ( RM10 000.00 x 3% x )
12
3
= RM10 000.00 + ( RM10 000.00 x )
400
= RM10 075.00

Amount of deposit in June (1st year)

= RM10 075.00 + Interest received
3
= RM10 075.00 + ( RM10 075.00 x )
400
= RM10 150.56

With the principal amount, the amount of deposit in March and June of
the 1st year, a number sequence could be formed as shown in the following.

RM10 000.00, RM10 075.00, RM10 150.56, …… (G.P.)

In order to calculate the amount Bakar will receive after three years in
his fixed deposit account, geometric progression can now be used.

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a = RM 10 000.00

r = RM10 075.00
RM10 000.00
= 1.0075

T13 (T1 is the principal amount, T2 is the amount after March of the 1st year, T3 is
the amount after June of the 1st year, … T13 is the amount after December of
the 3rd year)

T13 = 10 000.00 x ( 1.0075 )12

= RM10 938.07

As a result, the calculation above has shown that the total amount Bakar
will receive after 3 years is RM10 938.07. On top of that, Bakar earns
an additional RM938.07 from the interest after keeping RM10 000 in his
fixed deposit account without any withdrawal for three years.

The total amount Chandran will receive after three years

The amount of deposit in the first few months will have to be calculated.
Here, the amount of deposit in the first three months (June and
December in the first year, and June in the second year) is determined.

Principal amount = RM10 000.00

Amount of deposit in June (1st year)

= RM10 000.00 + Interest received in the month
6
= RM10 000.00 + ( RM10 000.00 x 3.5% x )
12
7
= RM10 000.00 + ( RM10 000.00 x )
400
= RM10 175.00

Amount of deposit in December (1st year)

= RM10 175.00 + Interest received
7
= RM10 175.00 + ( RM10 175.00 x )
400
= RM10 353.06

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 CHIN WYNN

With the principal amount, the amount of deposit in June and December
of the 1st year and June of the 2nd year, a number sequence could be
formed as shown in the following.

RM10 000.00, RM10 175.00, RM10 353.06, …… (G.P.)

In order to calculate the amount Chandran will receive after three years
in his fixed deposit account, geometric progression can now be used.

a = RM 10 000.00

r = RM10 175.00
RM10 000.00
= 1.0175

T7 (T1 is the principal amount, T2 is the amount after June of the 1st year, T3 is
the amount after December of the 1st year, … T7 is the amount after December
of the 3rd year)

T7 = 10 000 x ( 1.0175 )6
= RM11 097.02

Therefore, the result above has shown that the total amount Chandran will
receive after 3 years is RM11 097.02. On top of that, Bakar earns an
additional RM1 097.02 from the interest after keeping RM10 000 in his fixed
deposit account without any withdrawal for three years.

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 CHIN WYNN

1. (c) (ii) Compare and comment on the difference in interests received. If

you were to invest RM10 000 for the same period of time, which
fixed deposit account would you prefer? Give your reasons.

Comparisons between the interests received by Ang, Bakar and Chandran after
three years

The tables and calculations in the question 1 (c)(i) have shown that Ang, Bakar
and Chandran received different amount of interests after three years under
different rates of interest and renewal period of their fixed deposit accounts.

To sum everything up, the following table is designed to compare the amount of
interests received by Ang, Bakar and Chandran after three years.

Amount of
Interest Total
Initial deposit
Account rate per Period of interest
deposit after 3
owner annum renewal received
(RM) years
(%) (RM)
(RM)
At the end of 10 778.00 778.00
Ang 2.5
every month 10 938.07 938.07
At the end of
Bakar 3.0 10 000
every 3 months
11 097.02 1 097.02
At the end of
Chandran 3.5
every 6 months
Table 7: Comparisons between Ang’s, Bakar’s and Chandran’s fixed deposit
accounts after 3 years

By reading and analysing the data in the table above, it can be proven that
Chandran receives the most amount of interest in his fixed deposit account
after three years compared to the fixed deposit accounts owned by Ang and
Bakar.

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 CHIN WYNN

Choice of fixed deposit account and reasoning

Without a doubt, the preferred fixed deposit account of mine would be

Chandran’s fixed deposit account if I were to invest RM10 000 for 3 years.

One of the main reasons I would choose Chandran’s fixed deposit account is
that the percentage of interest received after 3 years in Chandran’s account is
higher than both Ang’s and Bakar’s fixed deposit account. To prove that the
percentage of interest received after 3 years in Chandran’s account is the
highest, let’s do some calculations.

Percentage increase = Amount of deposit after 3 years – Initial deposit x 100%

Initial deposit

Percentage increase in Ang’s account after 3 years

RM 10778.00 − 10000.00
= x 100%
RM 10000.00
778.00
= x 100%
10000.00
= 0.0778 x 100%
= 7.78%

Percentage increase in Bakar’s account after 3 years

RM 10938.07 − RM 10000.00
= x 100%
RM 10000.00
RM 938.07
= x 100%
RM 10000.00
= 0.093807 x 100%
= 9.93807%

Percentage increase in Chandran’s account after 3 years

RM 11097.02 − RM 10000.00
= x 100%
RM 10000.00
RM 1097.02
= x 100%
RM 10000.00
= 0.109702 x 100%
= 10.9702%

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 CHIN WYNN

As seen above, the percentage increase in Ang’s account after 3 years is the
lowest among all the three accounts. On the other hand, the percentage
increase in Bakar’s fixed deposit account is lower when compared with
Chandran’s fixed account, but higher than Ang’s account.

This is because the interest earned is more when the fixed deposit period is
longer. The advantage of short period of renewable interest is that the money
can be withdrawn during emergencies. The disadvantage is that less interest is
earned. On the other hand, the advantage pf long period of renewable interest
is that more interest is earned. However, the disadvantage is that if there is a
need of money, interest will be lost if the fixed amount is withdrawn.

Hence, by comparing the difference between the percentage increase in all the
three accounts after three years, it is very clear that the Chandran’s fixed
deposit account receives the highest percentage increase compared to the
other two accounts.

This is why I have chosen Chandran’s fixed deposit account over the other two
accounts because of its high percentage of interest after three years despite
the disadvantage since my objective is to gain the interest from my savings.

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 CHIN WYNN

Further Exploration

2. (a) When Chandran’s first child, Johan is born, Chandran invested RM300 for
him at 8% compound interest per annum. He continues to invest RM300 on
each of Johan’s birthday, up to and including his 18th birthday. What will
be the total value of the investment in Johan’s 18th birthday?

Method 1: Listing and Manual Calculation

Year Value of Investment (RM)

0 300.0000
1 624.0000
2 973.9200
3 1351.8336
4 1759.9803
5 2200.7787
6 2676.8410
7 3190.9883
8 3746.2674
9 4345.9688
10 4993.6463
11 5693.1380
12 6448.5890
13 7264.4761
14 8145.6342
15 9097.2849
16 10125.0677
17 11235.0731
18 (2 d.p.) 12433.88
Table 8: Value of investment on Johan

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 CHIN WYNN

Value of Investment against Year

14000

12433.8800
12000

11235.0731

10125.0677
Value of Investment (RM)

10000

9097.2849

8000 8145.6342

7264.4761

6448.5890
6000
5693.1380
4993.6463
4345.9688
4000
3746.2674
Graph 1: 3190.9883
Value of 2676.8410
2200.7787
2000
1759.9803
1351.8336
Investment 973.9200
on Johan 624.0000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Thus, the
total value of investment on Johan’s 18th Year birthday is RM12 433.88.

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 CHIN WYNN

Method 2: Geometric Progression (G.P.)

To fulfil the requirement of the question, we are to calculate the total value of
the investment on Johan’s 18th birthday.

The solution of this problem is by performing repetitive calculations.

1st year = RM300 + Interest received

= RM300 + ( RM300 x 8% )
= RM300 + ( RM300 x 0.08 )
= RM300 ( 1 + 0.08 )
= RM300 x ( 1.08 )

2nd year = RM300 x ( 1.08 )2

3rd year = RM300 x ( 1.08 )3
4th year = RM300 x ( 1.08 )4
5th year = RM300 x ( 1.08 )5
6th year = RM300 x ( 1.08 )6
7th year = RM300 x ( 1.08 )7
8th year = RM300 x ( 1.08 )8
9th year = RM300 x ( 1.08 )9
10th year = RM300 x ( 1.08 )10
11th year = RM300 x ( 1.08 )11
12th year = RM300 x ( 1.08 )12
13th year = RM300 x ( 1.08 )13
14th year = RM300 x ( 1.08 )14
15th year = RM300 x ( 1.08 )15
16th year = RM300 x ( 1.08 )16
17th year = RM300 x ( 1.08 )17

18th year = RM300 x ( 1.08 )18 + Investment when Johan was 0 year old
= RM300 x ( 1.08 )18 + RM300

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 CHIN WYNN

Thus, to find the total value of the investment on Johan’s 18th birthday, it is
necessary to use the geometric progression method.

a = Investment when Johan was 0 year old = RM300

r = Investment in the 2 year

nd

Investment in the 1st year

= RM300 x ( 1.08 )
2

RM300 x ( 1.08 )
= 1.08

Sn = a ( r – 1 )
n

r-1

S19 = 300 [ ( 1.08 ) – 1 ]

19

1.08 – 1
= 300 [ ( 1.08 ) – 1 ]
19

0.08
= RM12 433.88 (2 d.p.)

By using the method of calculation above, which is the “sum of the first nth
terms, Sn of a geometric progression” method, we can finally determine the
total value of investment on Johan’s 18th birthday. Noticeably, the result from
the calculation has shown that the total value of investment on Johan’s 18th
birthday is RM12 433.88.

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 CHIN WYNN

2. (b) If Chandran starts his investment with RM500 instead of RM300 at the
same interest rate, calculate on which birthday will the total investment
be more than RM25 000 for the first time.

Method 1: Listing and Manual Calculation

Based on the question, the investment of Chandran has changed from RM300 to
RM500.

Year Value of Investment (RM)

0 500.0000
1 1040.0000
2 1623.2000
3 2253.0560
4 2933.3005
5 3667.9645
6 4461.4017
7 5318.3138
8 6243.7789
9 7243.2812
10 8322.7437
11 9488.5632
12 10747.6483
13 12107.4601
14 13576.0569
15 15162.1415
16 16875.1128
17 18725.1218
18 20723.1316
19 22880.9821
20 25211.4607
Table 9: Value of investment on Johan

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 CHIN WYNN

Value of Investment against Year

30000

25211.4607
25000

22880.9821
Value of Investment (RM)

20723.1316
20000
18725.1218

16875.1128

15000 15162.1415

13576.0569

12107.4601

10747.6483
10000
9488.5632
8322.7437
7243.2812
6243.7789
5318.3138
5000
4461.4017
3667.9645
2933.3005
2253.0560
1623.2000
1040.0000
500.0000
0
0
1
2
3
4
5
6
7
8
9

14
15
16
17
18
10
11
12
13

19
20

Year

Graph 2: Value of Investment on Johan

Hence, the total investment will be more than RM25 000.00 for the first time
on Johan’s 20th birthday and this includes the RM500.00 invested on his 20th
birthday.

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 CHIN WYNN

Method 2: Geometric Progression (G.P.)

The question requires us to calculate on which birthday will the total investment
be more than RM25 000 for the first time if Chandran starts his investment
with RM500 instead of RM300 at the same rate of interest.

Since the only change in the investment in this question compared to the ones in
the previous question is the value of investment on every Johan’s birthday, we
can still use the “sum of the first nth terms, Sn of a geometric progression”
method (refer to the solution of the previous question) to calculate the total
value of investment on a specific year. However, the only change to the
formulae is to modify the value of a to RM500 instead of RM300 because this
question states that Chandran starts his investment with RM500 instead of
RM300. The value of r remains the same because there is no difference in the
rate of interest between both the questions.

a = RM500

r = 1.08

Therefore, the new formula for calculating the total value of investment on a
specific year in this question is shown in the following.

Sn = 500 [ ( 1.08) – 1 ]
n

1.08 - 1

To fulfil the requirement of the question, we are supposed to calculate on which

birthday will the total investment be more than RM25 000 for the first time if
Chandran starts his investment with RM500 instead of RM300 at the same rate
of interest.

500 [ ( 1.08)n – 1 ]  25 000

1.08 – 1
500 [ ( 1.08)n – 1 ]  25 000
0.08
500 [ ( 1.08 )n – 1 ]  2000
( 1.08 )n – 1 4
( 1.08 ) n
 5

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 CHIN WYNN

Until this stage, the value of n needs to be determined to find out on which
birthday will have the total investment of more than RM25 000 for the first
time. For that reason, logarithm method is used to work out the value of n.

lg 1.08n  lg 5

n lg 1.08 lg 5
lg 5
n  lg 1.08
n  20.91 (4 s.f.)
n = 21

Although n = 21, the first year is when Johan is 0 year old. Therefore, the total
investment will be more than RM25 000.00 for the first time on Johan’s 20th
birthday.

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 CHIN WYNN

CONCLUSION

Checking Answers (Method: Reverse Calculation)

Question 1(a)

Ang’s total income at the end of the 1st year = RM24 000.00
RM 24000.00
Ang’s salary per month =
12
= RM2 000.00

Bakar’s total income at the end of the 1st year = RM18 600.00
Using the arithmetic progression method,
Let a be the commission Bakar received for the 1st month.
d = RM100.00
n = 12
n
Sn = [ 2a + ( n – 1 ) d ]
2
12
18 600.00 = [ 2a + 11 ( 100.00 ) ]
2
3100.00 = 2a + 1100.00
2a = 2000.00
a = RM1000.00

Chandran’s total income at the end of the 1st year = RM25 749.27
Using the geometric progression method,
Let a be the profit Chandran earned for the 1st month.
r = 150%
= 1.5
n = 12
Sn = a ( rn – 1 )
r–1
25 749.27 = a [ ( 1.5 )12 – 1 ]
1.5 – 1
12 874.635 = a [ ( 1.5 )12 – 1]
a = RM100.00

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 CHIN WYNN

Question 1(b)

Percentage change in Ang’s total incomes = +10%

Ang’s total income at the end of the 1st year = RM24 000.00
Let Ang’s total income at the end of the 2nd year be x.
x – 24 000.00 = 10%
24 000.00
x = ( 0.1 x 24 000.00 ) + 24 000.00
x = RM26 400.00

Ang’s total income at the end of the 2nd year = RM26 400.00
RM 26400.00
Ang’s salary per month =
12
= RM2 200.00

Percentage change in Bakar’s total incomes = +14.52%

Bakar’s total income at the end of the 1st year = RM18 600.00
Let Bakar’s total income at the end of the 2nd year be y.
y – 18 600.00 = 14.52%
18 600.00
y = ( 0.1452 x 18 600.00 ) + 18 600.00
y = RM21 300.72

Bakar’s total income at the end of the 2nd year = RM21 300.72, which is
approximately same as the answer in the strategy, that is RM21 300.00.
Using the arithmetic progression method,
Let a be the commission Bakar received for the 1st month.
d = - RM50.00
n = 12
n
Sn = [ 2a + ( n – 1 ) d ]
2
12
21 300.00 = [ 2a + 11 ( - 50.00 ) ]
2
3550.00 = 2a – 550.00
2a = 4100.00
a = RM2 050.00
The answer is the same as the commission Bakar received for the 1st month,
which is also RM2 050.00. Thus, it is proven.

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 CHIN WYNN

Percentage change in Chandran’s total incomes = +116.94%

Chandran’s total income at the end of the 1st year = RM25 749.27
Let Chandran’s total income at the end of the 2nd year be z.
z – 25 749.27 = 116.94%
25 749.27
z = ( 1.1694 x 25 749.27 ) + 25 749.27
z = RM55 860.47

Chandran’s total income at the end of the 2nd year = RM55 860.47, which is
approximately same as the answer in the strategy, that is RM55 861.29.
Using the geometric progression method,
Let a be the profit Chandran earned for the 1st month.
r = 90%
= 0.9
n = 12
Sn = a ( 1 - rn )
1-r
55 861.29 = a [ 1 - ( 0.9 )12 ]
1 – 0.9
5 586.129 = a [ 1 – ( 0.9 )12 ]
a = RM7 784.78
The answer is the same as the profit Chandran earned in the 1st month, which is
also RM7 784.78. Thus, it is proven.

Question 1(c)(i)

Total amount received by Ang = RM10 778.00

Using the geometric progression method,
Let a be the initial principal amount.
1
r = 1 + ( 2.5% x )
12
481
=
480
n = 37 (36 months and the first term, which is the initial principal amount)
Tn = arn-1
481 36
10 778.00 = a ( )
480
a = RM10 000.00

41
 CHIN WYNN

Total amount received by Bakar = RM10 938.07

Using the geometric progression method,
Let a be the initial principal amount.
3
r = 1 + ( 3% x )
12
403
=
400
n = 13 (12 months and the first term, which is the initial principal amount)
Tn = arn-1
403 12
10 938.07 = a ( )
400
a = RM10 000.00

Total amount received by Chandran = RM11 097.02

Using the geometric progression method,
Let a be the initial principal amount.
6
r = 1 + ( 3.5% x )
12
407
=
400
n = 7 (6 months and the first term, which is the initial principal amount)
Tn = arn-1
407 6
11 097.02 = a ( )
400
a = RM10 000.00

Further Exploration
Question 2(a)

Total value of investment on Johan’s 18th birthday = RM12 433.88

Using the geometric progression method,
Let a be the money invested when Johan was born.
r = 108%
= 1.08
th
n = 19 ( Johan’s 18 birthday, including the year when Johan was born)
Sn = a ( rn – 1 )
r-1
12 433.88 = a [ ( 1.08 )19 – 1 ]
1.08 - 1
994.7104 = a [ ( 1.08 )19 – 1 ]
a = RM300.00

42
 CHIN WYNN

Question 2(b)

The total investment will be more than RM25 000.00 for the first time on
Johan’s 20th birthday.
Using the geometric progression method,
Let a be the money invested when Johan was born.
r = 108%
= 1.08
th
n = 21 ( Johan’s 20 birthday, including the year when Johan was born)
a = RM500.00

Sn = a ( rn – 1 )
r–1
S21 = 500.00 [ ( 1.08 )21 – 1 ]
1.08 – 1
= RM25 211.46

If n = 20,
S20 = 500.00 [ ( 1.08 )20 – 1 ]
1.08 – 1
= RM22 880.98

Thus, the total investment will be more than RM25 000.00 for the first time on
Johan’s 20th birthday.

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 CHIN WYNN

Results

Question 1(a)
Ang’s income at the of the 1st year = RM24 000.00
Bakar’s income at the end of the 1st year = RM18 600.00
Chandran’s income at the end of the 1st year = RM25 749.27

Question 1(b)
Ang’s income at the end of the 2nd year = RM26 400.00
Bakar’s income at the end of the 2nd year = RM21 300.00
Chandran’s income at the end of the 2nd year = RM55 861.29

Percentage change in Ang’s total incomes = +10%

Percentage change in Bakar’s total incomes = +14.52%
Percentage change in Chandran’s total incomes = +116.94%

The change is positive for all 3 of them. Ang has the least increase by a
fixed amount of 10%. Chandran’s income increase higher than Bakar’s
income because his increase is by geometric progression, whereas Bakar’s
income increase is by arithmetic progression.

Question 1(c)(i)
Total amount received by Ang = RM10 778.00
Total amount received by Bakar = RM10 938.07
Total amount received by Chandran = RM11 097.02

Question 1(c)(ii)
I have chosen Chandran’s fixed deposit account over the other two accounts
because of its high percentage of interest after three years despite the
disadvantage of losing the interest if the fixed deposit is withdrawn since my
objective is to gain the interest from my savings.

Further Exploration
Question 2(a)
Total value of investment on Johan’s 18th birthday = RM12 433.88

Question 2(b)
The total investment will be more than RM25 000.00 for the first time on
Johan’s 20th birthday.

44
 CHIN WYNN

Generalisation

A fixed deposit account of RM10 000 for 3 years without any withdrawal will
earn a higher interest if the investment plan offers a higher interest rate per
annum. The best example is Chandran, who received the highest total amount of
money after 3 years.

Besides that, income which increases by geometric progression experience

greater increase compared to arithmetic progression.

Finally, parents should invest some money when their children are born, like
Chandran. From the example, although Chandran invested a small amount of
money only (RM300.00), the outcome after 19 years is RM12 433.88. If he
invested more, the outcome would be greater some more. Hence, the money
could be used for children’s education like furthering their studies in overseas.

45
 CHIN WYNN

ATTACHMENT

Document 1: Rubric for Additional Mathematics Project Work 2007

46
 CHIN WYNN

Document 2: Guidelines for the Implementation of Additional Mathematics

Project Work

47
 CHIN WYNN

APPENDIX

1. http://www.tuitionplaza.com/bb/forum_posts.asp?TID=7
180&PN=0&TPN=2&dbqp=56921
2. http://geminigeek.com/blog/archives/2004/08/addmath-
project-tips-1/
3. http://nextlevel.com.sg/question/10949

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