Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

Cash management question - help!

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

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%


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)

Comments

  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Dear Rosie
    I 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 months 30,000 x 0.5 x 4% = £600
    Second 6 months 30,000 x 0.5 x 3% = £450
    Year 2 30,000 x 3% = £900
    Year 3 30,000 x 3% = £900
    Year 4 30,000 x 3% = £900

    This 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 months 30,000 x 0.5 x 5% = £750
    Second 6 months 30,000 x 0.5 x 4% = £600
    Year 2 30,000 x 4% = £1,200
    Year 3 30,000 x 4% = £1,200
    Year 4 30,000 x 4% = £1,200

    I agree with you that the answer should be £4,950

    Yours
    Sandy

    Sandy
    [email protected]
    www.sandyhood.com
  • j1994j1994 Registered Posts: 106
    hi I have my cash management exam next week and cant get my head round these two questions from the aat 2013 assessment 1 . task 1 and task 3b
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    j1994
    I 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
    Sandy
    [email protected]
    www.sandyhood.com
  • j1994j1994 Registered Posts: 106
    I've tried going over them I think it's the wording but yes completely lost
Sign In or Register to comment.