# Cash management question - help!

RosieJane
Registered Posts:

**35**
From Osborne workbook, practice exam 1.Task 8, e.

I can't understand the logic behind this one. Can anybody explain?

I would have done 6 months at 1% on top of the 4 years at 4% to get interest of £4950 (30000*4%*4 plus 30000*1%/2)

The answer is £3750 i.e. £600 + £450 (yr1) + £2700 (yr2-4)

I can't understand the logic behind this one. Can anybody explain?

Calculate the gross return in interest to the following investment accounts (ignoring any compounding of interest)

£30,000 invested for 4 years at 4.00% pa. A rate which includes a first six months bonus of 1%Calculate the gross return in interest to the following investment accounts (ignoring any compounding of interest)

£30,000 invested for 4 years at 4.00% pa. A rate which includes a first six months bonus of 1%

I would have done 6 months at 1% on top of the 4 years at 4% to get interest of £4950 (30000*4%*4 plus 30000*1%/2)

The answer is £3750 i.e. £600 + £450 (yr1) + £2700 (yr2-4)

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## Comments

2,034I disagree with the answer.

If the rate was 3% pa with a 1% bonus for the first 6 months I would work it out as:

First 6 months30,000 x 0.5 x 4% = £600Second 6 months30,000 x 0.5 x 3% = £450Year 230,000 x 3% = £900Year 330,000 x 3% = £900Year 430,000 x 3% = £900This gives the answer £3,750

But it doesn't

The rate is 4% pa with a 1% bonus for the first 6 months I would work it out as:

First 6 months30,000 x 0.5 x 5% = £750Second 6 months30,000 x 0.5 x 4% = £600Year 230,000 x 4% = £1,200Year 330,000 x 4% = £1,200Year 430,000 x 4% = £1,200I agree with you that the answer should be £4,950

Yours

Sandy

[email protected]

www.sandyhood.com

1062,034I do not have access to either question. There may be other discussion forumites with access able to help.

Are you at a complete loss as far as the task subject content is concerned?

Or is it just the wording of these two specific questions?

Yours

Sandy

[email protected]

www.sandyhood.com

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