Unit 1: Number and Algebra
Topic 1.4: Compound Interest and Depreciation Questions
Practice 20 exam-style questions for IB Math AI SL Topic 1.4. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
1Find3 marks
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A house price rises by 6% per year from $300 000. Find the value after 4 years.
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Find the value of $4500 invested at 5% per year for 3 years, compounded quarterly.
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Unlock Question3State1 mark
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A value grows by 5% per year for 3 years from $2000. Which expression should be used?
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2026
Which situation is best modelled by compound depreciation?
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A sum of $6 000 is deposited in a bank account paying 5% per year, compounded annually, for 3 years. Find the value of the account at the end of 3 years.
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2026
What value of k is used for quarterly compounding?
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A phone loses 18% of its value each year. What is the yearly multiplier?
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If a question asks “how long will it take?”, which TVM variable is usually unknown?
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For 4 years compounded monthly, what should N be?
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2026
A savings account grows by 7% per year. Which model is correct for an initial amount P after n years?
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2026
In FV = PV × (1 + r/(100k))kn, how should r = 5% be entered?
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2026
A machine costs $8000 and depreciates by 9% per year. Write its value after n years as a model.
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Explain why a yearly 8% increase gives the multiplier 1.08.
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2026
A question asks which investment is better for the largest balance after 5 years. What should be compared?
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Why is PV often negative in TVM questions?
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2026
Why is “Option B is better” weaker than “Option B is better because it gives the larger final balance”?
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2026
Two accounts both advertise 6% per year. One compounds yearly and one monthly. Which usually gives the larger final value?
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2026
In FV = PV(1 + r/(100k))kn, what does kn represent?
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2026
In the IB compound-interest formula, what value of k is used for monthly compounding?
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