GENERAL

MATHEMATICS
UNITS 3 & 4

CAMBRIDGE SENIOR MATHEMATICS

FOR QUEENSLAND
PETER JONES | MICHAEL EVANS | KAY LIPSON | KYLE STAGGARD
Consultants: Ray Minns | Steve Sisson

General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
Cambridge Senior Mathematics for Queensland Photocopying is restricted under law and this material must not be transferred to another party
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General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
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 Contents

About the lead author and consultants ix

Introduction and overview x

Acknowledgements xv

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND EARTH GEOMETRY

1 Investigating associations between two variables

1A Bivariate data − classifying the variables. . . . . . . . . . . . . . . . . . . . . . . . . .
1
2
1B Investigating associations between two categorical
variables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1C Displaying bivariate data from two numerical
variables – the scatterplot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1D Interpreting a scatterplot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1E A measure of strength for a linear relationship – the
correlation coefficient. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
1F The coefficient of determination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Review of Chapter 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

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 iv Contents

2 Modelling associations between variables

2A Fitting a linear model to numerical data. . . . . . . . . . . . . . . . . . . . . . . . . . 58
57

2B Using the least squares regression line to model a

relationship between two numerical variables. . . . . . . . . . . . . . . . . . . . 68
2C Association and causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
2D Conducting an investigation – solving practical problems. . . . . . . . 88
Review of Chapter 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

3 Time series analysis

3A Time series data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
107
3B Describing time series plots. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
3C Smoothing a time series using moving means. . . . . . . . . . . . . . . . . . . . 121
3D Seasonal indices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
3E Fitting a trend line and forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
3F Conducting a statistical investigation involving time series. . . . . . . 148
Review of Chapter 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

4 Arithmetic and geometric sequences

4A Sequences and simple recursion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162
163
4B Defining an arithmetic sequence by recursion. . . . . . . . . . . . . . . . . . . . 166
4C A general rule for finding the nth term of an arithmetic
sequence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
4D Application of arithmetic sequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
4E Geometric sequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
4F A general rule for finding the nth term of a geometric
sequence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
4G Applications of geometric sequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Review of Chapter 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
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 Contents v  

5 Earth geometry and time zones

5A Angle measurement and arc length . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
217
218
5B Latitude and longitude. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
5C Time zones and time differences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Review of Chapter 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

6 Revision of Unit 3 Chapters 1–5

6A Topic 1 Bivariate data analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250
251
6B Topic 2 Time series analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
6C Topic 3 Growth and decay in sequences. . . . . . . . . . . . . . . . . . . . . . . . . . 273
6D Topic 4 Earth geometry and time zones . . . . . . . . . . . . . . . . . . . . . . . . . . 277
6E List of Unit 3 assessment and examination practice
online items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

UNIT 4 INVESTING AND NETWORKING

7 Compound interest loans and investments

7A Sequences and recurrence relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
280
281
7B Modelling simple and compound interest situations
with recurrence relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
7C Investigating compound interest loans and investments. . . . . . . . . 297
7D Effective annual rate of interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
7E Solving problems involving compound interest. . . . . . . . . . . . . . . . . . 308
Review of Chapter 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

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 vi Contents

8 Reducing-balance loans
8A A recursive model for reducing-balance loans. . . . . . . . . . . . . . . . . . . .
323
324
8B Investigating reducing-balance loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
8C Solving problems involving reducing-balance loans. . . . . . . . . . . . . . 335
Review of Chapter 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348

9 Annuities and perpetuities

9A Recursive model for annuities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
350
351
9B Investigating annuities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362
9C Solving problems involving annuities with technology*. . . . . . . . . . 368
9D Perpetuities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Review of Chapter 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

10 Graphs and networks

10A Graphs and associated terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
390
391
10B The adjacency matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
10C Planar graphs and Euler’s formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
10D Exploring a graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410
10E Eulerian graphs and applications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
10F Hamiltonian graphs and applications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
10G Weighted graphs, networks and shortest path problems . . . . . . . . 424
Review of Chapter 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434

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 Contents vii  

11 Connector, assignment and flow problems

11A Trees and connector problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
438
439
11B Assignment problems and the Hungarian algorithm . . . . . . . . . . . . . 446
11C Flow networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
Review of Chapter 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468

12 Project planning and scheduling

12A Project planning – precedence tables and activity networks . . . . .
472
473
12B Scheduling problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482
12C Applications of critical path analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
Review of Chapter 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Key ideas and chapter summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Skills check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Multiple-choice questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Short-answer questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
Extended-response questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508

13 Revision of Unit 4 Chapters 7–12

13A Topic 1 Loans, investments and annuities . . . . . . . . . . . . . . . . . . . . . . . .
514
515
13B Topic 2 Graphs and networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
13C Topic 3 Networks and decision mathematics. . . . . . . . . . . . . . . . . . . . . 531
13D List of Unit 4 and Units 3 & 4 assessment and
examination practice online items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542

Glossary 543

Answers 550

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 viii Contents

Online appendices

Appendix 1 Review of computation and practical arithmetic

A copy of the review chapter of computation in the Units 1 & 2 textbook is provided
in the Interactive Textbook.

Appendix 2 Online guides to using technology

These online guides are accessed through the Interactive Textbook or PDF Textbook

A2.1 Online guide to spreadsheets

A2.2 Online guides to the Desmos graphing calculator

A2.3 Online guides to using handheld calculators

Online assessment and examination practice items

These items, accessed via the Interactive Textbook and Online Teaching Suite, are
listed at the ends of the revision chapters 6 and 13.

Note: A printable copy of a formula sheet is available in the Interactive Textbook

General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
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 About the lead authors
and consultants
Peter Jones is Emeritus Professor of Statistics at Swinburne University. He has worked as a
consultant to the Australian Curriculum, Assessment and Reporting Authority (ACARA) on the
development of the Australian Curriculum, General Mathematics. He has worked in curriculum
development and teacher professional development and has written examinations and has been a
chief examiner for many years. He has been a writer of textbooks for the Years 11 and 12 General
Mathematics courses for twenty-five years. His textbooks have become the most popular senior
mathematics textbooks in Australia.
Michael Evans was a consultant to ACARA on the writing of the Australian Curriculum on which
the new Queensland syllabus is based. He is a consultant with the Australian Mathematical Sciences
Institute, and is coordinating author of the ICE-EM 7–10 series also published by Cambridge. He has
also been active in the Australian Mathematics Trust, being involved with the writing of enrichment
material and competition questions. He has many years’ experience as a Chief Examiner and
Chairperson of examination panels.
Ray Minns is Head of Mathematics at Northpine Christian College, Dakabin.
Steve Sisson is Head of Mathematics at Redeemer Lutheran College, Rochedale.

General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
Cambridge Senior Mathematics for Queensland Photocopying is restricted under law and this material must not be transferred to another party
 Introduction and
overview
Cambridge Senior Mathematics for Queensland General Mathematics Units 3&4 has been written
for the QCAA syllabus to be implemented in Year 12 from 2020. As well as covering all the subject
matter of the Queensland General Mathematics syllabus, the package addresses its objectives,
assessment, underpinning factors, formula sheet, and pedagogical and conceptual frameworks.
Its four components—the print textbook, the downloadable PDF textbook, the online Interactive
Textbook and the Online Teaching Resource*—contain a huge range of resources, including worked
solutions, available to schools in a single package at one convenient price. There are no extra
subscriptions or per-student charges to pay.
*The Online Teaching Resource is included with class adoptions, conditions apply.

▶▶Overview of the print textbook (shown on the page opposite)

1 The print book comes with linked digital resources and access to some previous years’ resources.
2 Chapter outcomes are listed at the beginning of each chapter under the syllabus units and topics.
3 Each section and most exercises begin at the top of the page to make them easy to find and
access.
4 Step-by-step worked examples with precise explanations and video versions encourage
independent learning, and are linked to exercises.
5 Important concepts are formatted in boxes for easy reference.
6 Degree of difficulty categories are indicated for exercises and are featured in the revision chapters.
Degree of difficulty classification of questions: in the exercises, questions are classified as
simple familiar SF , complex familiar CF , and complex unfamiliar CU questions. The
revision chapters described below also contain model questions for each of these categories, and
tests are also provided in the teacher resources, made up of such categorised model questions.
7 Problem-solving and modelling questions are included in Unit 3. QCAA guidelines have been
followed.
8 Two revision chapters are provided, one for each unit, with multiple-choice, short-answer
and extended response questions. Each exercise covers a chapter and is divided into degree of
difficulty categories, with problem-solving and modelling questions and investigations in Unit 3.
9 Technology is supported via scientific calculator guidance, spreadsheets and Desmos widgets.
10 Spreadsheet activities are integrated throughout the text, with accompanying Excel files in the
Interactive Textbook.
11 Chapter reviews contain a chapter summary and multiple-choice, short-answer and
extended-response questions.

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 Introduction and overview xi  

12 A comprehensive glossary is included.

13 Additional linked resources in the Interactive Textbook and Online Teaching Suite are indicated
in the text, such as:
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 1
Chapter 1
Investigating associations
between two variables

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 1 Bivariate data analysis

▶▶ How do we define bivariate data?

▶▶ How do we construct two-way tables?
▶▶ How do we interpret and identify patterns in two-way tables
using percentages?
▶▶ How do we construct a scatterplot?
▶▶ How do we describe an association between two numerical
variables in terms of direction, form and strength?
▶▶ How do we calculate and interpret the correlation coefficient?
▶▶ How do we differentiate between association and causation?

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 2 Chapter 1 ■ Investigating associations between two variables

Introduction
Much of the analysis that is carried out in statistics is not concerned with a single variable,
but rather with the relationships between two or more variables. Questions such as ‘Is the
new treatment for headache more effective than the old treatment?’, ‘Are females more
likely to vote for the Greens party than males?’ or ‘Are younger people more knowledgeable
about environmental issues than older people?’ are concerned with understanding the
association between two variables.
To answer these questions requires two items of data for each subject. So, for example, for
the first question we need to know for each person in the study which treatment they used
and how effective the treatment has been for them.
When there are data from two variables for the same subject, this is called bivariate data.

1A Bivariate data – classifying the variables

To determine how to answer questions involving two variables requires the variables to be
clearly defined.

▶▶Categorical and numerical variables

You will recall from General Mathematics in Year 11 we defined two classifications of
variables, categorical and numerical variables:

■■Categorical variables generate data values that are names or labels, such as sex (male,
female) or coffee size (small, medium, large).
■■ Numerical variables generate data values that are numbers, usually resulting from
counting or measuring, such as number of brothers (0, 1, 2, …) or hand span (cm).

Example 1 Identifying variables as categorical or numerical

Identify each of the following variables as either categorical or numerical:
a weight (kg)
b favourite colour
c support for same sex marriage (yes, no)
d number of pine trees per acre of forest
e attitude to lowering the driving age (strongly agree, agree, no opinion, disagree,
strongly disagree)

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 1A Bivariate data – classifying the variables 3  

Solution
a Weight Numerical – the data values arise from
measuring
b Favourite colour Categorical – the data values are labels such
as red or blue
c Support for same sex marriage Categorical – the data values are labels
d Number of pine trees per acre of forest Numerical – the data values arise from counting
e Attitude to lowering the driving age Categorical – the data values are labels

The first step in investigating the association between two variables is to classify each
variable as either categorical or numerical. What can we say about the types of variables
involved in the questions previously posed?
‘Is the new treatment for headache more effective than the old treatment?’
To investigate this question requires firstly a definition of ‘effective’. Suppose that the
effectiveness of the treatment is to be measured by the time it takes for the headache
to be relieved, measured in minutes. Then the two variables in this question are type of
treatment, a categorical variable taking the values ‘new’ and ‘old’, and time taken for the
headache to be relieved, a numerical variable. Thus, investigation of a question like this
can be classified as investigating the association between a categorical variable and a
numerical variable.
‘Are females more likely to vote for the Greens party than males?’
This question involves two variables, sex, which is a categorical variable taking the values
‘male’ and ‘female’, and vote for the Greens, which also is a categorical variable taking the
values ‘yes’ and ‘no’. Investigation of a question like this can be classified as investigating
the association between two categorical variables.
‘Are younger people more knowledgeable about environmental issues than older
people?’
If the age of the respondent is measured in years, then age is a numerical variable. Suppose
knowledge of environmental issues is measured with a sequence of questions and the
respondent is given a score out of 100, then knowledge of environmental issues is also a
numerical variable. Investigation of a question like this can be classified as investigating the
association between two numerical variables.
Numerical variables can be divided into continuous variables which represent a quantity
that is measured rather than counted, for example the weights of people in kilograms, and
discrete variables which represent a quantity that is determined by counting, for example,
the number of people waiting in a queue.

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 4 Chapter 1 ■ Investigating associations between two variables

Example 2 Identifying associations as categorical or numerical

For each of the following questions, determine if they involve investigating associations
between:
■■ one numerical variable and one categorical variable or
■■ two categorical variables or
■■ two numerical variables.
a Are younger people (age measured in years) more likely to believe in astrology
(measured as yes or no) than older people?
b Do students spend more hours studying each week get higher test scores?
c Are people who have a driver’s licence more likely to be in favour of lowering the
driving age?

Solution
a One numerical variable (age) and one categorical variable (belief in astrology)
b Two numerical variables (hours studied per week and test score)
c Two categorical variables (have a driver’s licence and support for lowering the driving age)

▶▶Identifying response and explanatory variables

The second step in investigating the association between two variables is to determine
which of the two variables is the explanatory variable and which is the response variable.
We use the explanatory variable to explain the associated changes in the response variable.
For example:

■■‘Is the new treatment for headache more effective than the old treatment?’
•• Type of treatment is the explanatory variable as it may explain any changes in time
taken for the headache to be relieved.
••Time taken for the headache to be relieved is the response variable as changes could
occur in response to the type of treatment used.
■■ ‘Are females more likely to vote for the Greens party than males?’
••Sex is the explanatory variable as it may explain any difference in vote for the Greens.
••Vote for the Greens is the response variable as differences could occur in response to
the sex of the voter.
■■ ‘Are younger people more knowledgeable about environmental issues than older
people?’
••Age is the explanatory variable as it may explain any changes in knowledge of
environmental issues.
••Knowledge of environmental issues is the response variable as changes could occur in
response to the age of the person.

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 1A Bivariate data – classifying the variables 5  

Example 3 Identifying response and explanatory variables

We wish to investigate the question, ‘Does the time it takes a student to travel to school
depend on their mode of transport?’ The variables here are time and mode of transport.
Which is the response variable (RV) and which is the explanatory variable (EV)?

Solution
In asking the question in this way, we are EV: mode of transport
suggesting that a student’s mode of transport RV: time
might explain the differences we observe in the
time it takes students to travel to school.

Example 4 Identifying response and explanatory variables

Can we predict people’s height (in cm) from their wrist circumference (cm)? The
variables in this investigation are height and wrist measurement. Which is the response
variable (RV) and which is the explanatory variable (EV)?

Solution
Since we wish to predict height from wrist EV: wrist measurement
circumference, we are using wrist measurement RV: height
as the predictor or explanatory variable. Height
is then the response variable.

It is important to note that, in Example 4, we could have asked the question the other way
around; that is, ‘Can we predict people’s wrist measurement from their height?’ In that case
height would be the explanatory variable, and wrist measurement would be the response
variable. The way we ask our statistical question is an important factor when there is no
obvious explanatory variable.

Response and explanatory variables

When investigating the association between two variables, the explanatory variable (EV)
is the variable we expect to explain or predict the value of the response variable (RV).

Note: The explanatory variable is sometimes called the independent variable (IV) and the response
variable the dependent variable (DV).

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 6 Chapter 1 ■ Investigating associations between two variables 1A

Exercise 1A
Identifying variables as categorical or numerical
Example 1 1 Identify each of the following variables as either categorical or numerical.

SF
a income (low, medium, high)
b favourite TV show
c time taken to drive to work in minutes
d emotional intelligence, as measured on a standardised psychological test on a scale
from 1–100
e self-assessed state of health
(1 = excellent, 2 = good, 3 = satisfactory, 4 = poor, 5 = very poor)
f temperature (°C)
g weekly salary ($)
h weekly salary (1 = below average, 2 = average, 3 = above average)
i weekly salary (less than $500, $500–$999, $1000–$1999, more than $2000)

Identifying associations as categorical or numerical

Example 2 2 For each of the following questions, determine if they involve investigating
associations between:
■■ one numerical and one categorical variable or
■■ two categorical variables or
■■ two numerical variables.
a Are males and females equally likely to be in favour of same sex marriage?
b Do Year 11 students watch more hours of television each week than Year 12 students?
c Do countries with higher household incomes ($) tend to have lower infant
mortality rates (deaths/1000 births)?
d Is there a relationship between attitude to gun control and country of birth?

Identifying response and explanatory variables

Example 3, 4 For each of the following situations identify the explanatory variable (EV) and the
response variable (RV). In each situation the variable names are italicised.

3 a W
 e wish to investigate whether a fish’s toxicity can be predicted from its colour.
b The relationship between weight loss and type of diet is to be investigated.
c We wish to investigate the relationship between a used car’s age and its price.
d It is suggested that the cost of heating in a house depends on the type of fuel used.
e The relationship between the house price and its location is to be investigated.

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 1A 1A Bivariate data – classifying the variables 7  

4 The following pairs of variables are related. Which is likely to be the explanatory
variable? The variable names are italicised.
a exercise level and age
b years of education and salary level
c comfort level and temperature
d time of year and incidence of hay fever
e age group and musical taste
f AFL team supported and state of residence

5 For each of the following pairs of variables, determine:

■■ which are numerical and which are categorical, and
■■ which is the explanatory variable and which is the response variable.
a sex and attitude to lowering the legal drinking age
b hours of study per week and hours spent per week using social media for Year 12
students
c gestation time and birth weight of babies
d sex and hours spent per week using social media for Year 12 students
e voting preference (Liberal, Labor, Greens, other) and support for tax cuts

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 8 Chapter 1 ■ Investigating associations between two variables

1B Investigating associations between two categorical

variables
To begin our analysis of data arising from two categorical variables we will introduce a
table used to summarise bivariate data.

▶▶Two-way frequency table

It has been suggested that males and females have differing attitudes to gun control; that is,
that support for gun control depends on the sex of the person. How might we investigate this
relationship? Suppose we ask a sample of three people about their attitude to gun control,
and we also record their sex. The resulting data for the three people might look like this:

Subject no. Sex Attitude to

gun control
1 Female For
2 Male For
3 Male Against

The first thing to note is that these two variables, attitude to gun control (for or against) and
sex (male or female), are both categorical variables. Categorical data are usually presented
in the form of a frequency table.
Suppose we continue until we have interviewed a sample
Sex Frequency
of 100 people, and we find that there are 58 males and
42 females. We can present this result in a frequency table as Male 58
shown to the right. Female 42

From this table, we can see that there were more males than Total 100
females in our sample.
Suppose also when we record the attitude to gun control, we
Attitude Frequency
might have 62 ‘for’ and 38 ‘against’ gun control. Again, we
to gun
could present these results in a frequency table as shown to
control
the right.
For 62
From this table, we can see that more people in the sample
Against 38
were for gun control than against gun control. However,
we cannot tell from the information contained in the tables Total 100
whether attitude to gun control depends on the sex of the
person. To do this we need to construct a two-way frequency table, which gives both the
attitude to gun control and the sex for each person in the sample.

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 1B Investigating associations between two categorical variables 9  

We begin by counting the number of people in the sample who are:

■■male and for gun control

■■female and for gun control
■■male and against gun control
■■female and against gun control.
Suppose again from our sample of 100 people we find the following frequencies:

■■32 males are for gun control

■■30 females are for gun control
■■26 males are against gun control
■■12 females are against gun control.
▶▶Explanatory and response variables in two-way frequency tables
Before we set up the two-way frequency table, we need to decide which is the explanatory
variable and which is the response variable of the two variables. Since we think that a person’s
attitude to gun control might depend on their sex, but not the other way around, then:

■■sex is the explanatory variable (EV)

■■attitude to gun control is the response variable (RV).
In two-way frequency tables, it is conventional to let the categories of the response
variable label the rows of the table and the categories of the explanatory variable label
the columns of the table. Following this convention, we can create the following two-way
frequency table.

Sex
Attitude to gun control Male Female
For 32 30
Against 26 12

To complete the table, it is usual to calculate the row and column sums, as shown below.

Sex
Attitude to gun control Male Female Total
For 32 30 62 Row sum
Against 26 12 38 Row sum
Total 58 42 100
Column sum Column sum

The shaded regions in the table are called the cells of the table. It is the numbers in these
cells that we look at when investigating the relationship between the two variables.

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 10 Chapter 1 ■ Investigating associations between two variables

Example 5 Constructing a two-way frequency table

The following data were obtained when a sample of 10 Year 9 students were asked if they
intended to go to university. The sex of the student was also recorded.

Student Sex Intends to go Student Sex Intends to go

No. to university No. to university
1 Female Yes 6 Male Yes
2 Male Yes 7 Female Yes
3 Female No 8 Male No
4 Female Yes 9 Female No
5 Male No 10 Female Yes

Create a two-way frequency table from these data.

Solution
1 We first need to identify the It is possible that a student’s intention to go to university
explanatory variable and the may depend on their sex, but not the other way around.
response variable. Thus, sex is the explanatory variable and intends to go to
university is the response variable.
2 Create the table showing the
Sex
values of sex labelling the
columns, and intends to go to Intends to go to university Male Female
university labelling the rows. Yes
No
3 Consider Student 1, who is
Sex
female and indicated yes to go
to university. Place a mark in Intends to go to university Male Female
the corresponding cell of the Yes I
table.
No
4 Go through the data set one
Sex
person at a time, placing a
mark in the appropriate cell Intends to go to university Male Female
for each person. Yes II IIII
No II II

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 1B Investigating associations between two categorical variables 11  

5 Finally, tally the marks in

Sex
each cell, and then calculate
the row and columns sums. Intends to go to Male Female Total
Make sure the total adds to university
the number of students in the Yes 2 4 6
sample.
No 2 2 4
Total 4 6 10

Consider again the two-way frequency table created to investigate the association between
sex and attitude to gun control. This table tells us that more males are in favour of gun
control than females. But is this just due to the fact that there were more males in the
sample, or are males really more in favour of gun control than females? To help us answer
this question we need to express the frequencies in each cell as percentage frequencies.

▶▶Two-way percentage frequency table

When the two-way frequency table has been constructed so that the values of the
explanatory variable label the columns, then we calculate column percentages to help us
investigate the association. This will give us the percentage of males and the percentage of
females for and against gun control, which can then be compared.
Column percentages are determined by dividing each of the cell frequencies by the relevant
column sums. Thus, the percentage of:

■■males who are for gun control is: 32

58
× 100 = 55.2%

■■males who are against gun control is: 26

58
× 100 = 44.8%

■■females who are for gun control is: 30

42
× 100 = 71.4%

■■females who are against gun control is: 12

42
× 100 = 28.6%

Note: Unless small percentages are involved, it is usual to round percentages to one decimal place in
tables.

Sex
Attitude Male Female
For 55.2% 71.4%
Against 44.8% 28.6%
Total 100.0% 100.0%

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 12 Chapter 1 ■ Investigating associations between two variables

▶▶Using percentages to identify relationships between variables

Calculating the values in the table as percentages enables us to compare the attitudes of males
and females on an equal footing. From the table, we see that 55.2% of males in the sample
were for gun control compared to 71.4% of the females. This means that the females in the
sample were more supportive of gun control than the males. This reverses what the frequencies
showed. It is easy to be misled if you just compare frequencies in a two-way frequency table.
The fact that the percentage of ‘males for gun control’ differs from the percentage of
‘females for gun control’ indicates that a person’s attitude to gun control depends on their
sex. Thus, we can say that the variables attitude to gun control and sex are associated.
If the variables attitude to gun control and sex were not associated, we would expect
approximately equal percentages of males and females to be ‘for’ gun control.
We could have also arrived at this conclusion by focusing our attention on the percentages
‘against’ gun control. We might report our findings as follows.

Report
In this sample of 100 people, we see a higher percentage of females were for gun control than males:
71.4% to 55.2%. This indicates that a person’s attitude to gun control is associated with their sex.

Note: Finding a single row in the two-way frequency distribution in which percentages are clearly different
is sufficient to identify a relationship between the variables.

We will now consider a two-way percentage frequency table that shows no evidence of
a relationship. Consider the following table that summarises responses to the question
‘Should mobile phones be banned in cinemas?’ These responses were obtained from 100
students in Year 10 and Year 12 – we are interested in investigating whether there is an
association between these variables.

Year level
Should mobile phones Year 10 Year 12
be banned in cinemas?
Yes 87.9% 86.8%
No 12.1% 13.2%
Total 100.0% 100.0%

When we look across the first row of the table, we see that the percentages in favour are
very similar. In this case, we might report our findings as follows.

Report
In this sample of 100 Year 10 and Year 12 students, we see that the percentage of Year 10 and Year 12
students in support of banning mobile phones in cinemas is similar: 87.9% to 86.8%. This indicates
that a person’s support for banning mobile phones in cinemas is not associated with their year level.
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 1B Investigating associations between two categorical variables 13  

Example 6 Interpreting a two-way percentage frequency table

Are males and females in Year 9 equally likely to indicate an intention to go to
university? Data from interviews with 200 Year 9 students are summarised in the
following table. Write a brief report addressing this question and quoting appropriate
percentages.

Sex
Intend going to university Male Female Total
Yes 50 54 104
No 55 41 96
Total 105 95 200

Solution
1 Determine the column percentages
Sex
as follows:
50 Intend going to university Male Female
% of males = × 100 = 47.6%
105 Yes 47.6% 56.8%
2 Complete the table as shown.
No 52.4% 43.2%
Total 100.0% 100.0%
3 Select an appropriate row to
Sex
compare the male and female
percentages. We can see from Intend going to university Male Female
the row indicated that a greater Yes 47.6% 56.8%
proportion of females than males
No 52.4% 43.2%
(56.8% compared with 47.6%)
were intending to go to university. Total 100.0% 100.0%
4 Construct a report. Report
In this sample of 200 Year 9 students, a greater
proportion of females than males (56.8% compared
with 47.6%) were intending to go to university. There
is an association between sex and intention to go to
university.

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 14 Chapter 1 ■ Investigating associations between two variables

▶▶Two-way frequency tables for categorical variables with more

than two categories
The two-way percentage frequency table below displays the smoking status for 500 adults
(smoker, past smoker, never smoked) by highest level of education (Year 9 or less, Year 10
or 11, Year 12, university).

Level of education (%)

Smoking status Year 9 or less Year 10 or 11 Year 12 University
Smoker 34.0 31.7 26.5 18.4
Past smoker 36.0 33.8 30.9 28.0
Never smoked 30.0 34.5 42.6 53.6
Total 100.0 100.0 100.0 100.0

The following segmented bar chart has been constructed from this table to help us
with the analysis. Each column represents a column from the purple-shaded part of the
table.

100
Smoking status
80 Never smoked
Percentage

Past smoker
60
Smoker
40

20

0
Yr 9 or less Yr 10 or 11 Yr 12 University
Level of education

From the table and the segmented bar chart it is clear that there is an association between
level of education and smoking status, with those with higher levels of education more
likely to have never smoked. We could report this finding as follows, quoting exact
percentages from the table.

Report
In this sample of 500 adults there is an association between level of education and smoking status
as the percentage of adults who have never smoked tends to increase with level of education. The rate
is lowest at 30.0% for those with an education level of Year 9, increases to 34.5% for those with Year
10 and 11, 42.6% for those with Year 12, and is highest at 53.6% for those who attended university.

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 1B Investigating associations between two categorical variables 15  

Example 7 Identifying and describing associations between two categorical

variables from a two-way table

A survey was conducted with

Age group (%)
1000 males under 50 years old.
Interest Under 19–25 26–35 36–50
As part of this survey, they
in sport 18 years years years years
were asked to rate their interest
in sport as ‘high’, ‘medium’ or High 56.5 50.2 40.7 35.0
‘low’. Their age group was also Medium 30.1 34.4 36.8 45.8
recorded as ‘under 18’,‘19–25’,
Low 13.4 13.4 22.5 20.3
‘26–35’ and ‘36–50’. The results
Total 100.0 100.0 100.0 100.0
are displayed in the table.
a Which is the explanatory variable, interest in sport or age group?
b Is there an association between interest in sport and age group? Write a brief response
quoting appropriate percentages.

Solution
a Age is a possible explanation for Age group is the EV.
the level of interest in sport, but
interest in sport cannot explain age.
b If we look across all rows, we There is an association between the level of interest in
can see that the percentages are sport and age. A high level of interest in sport is seen
different for each age group. Select to decrease steadily across the age categories from
one row to compare and discuss –
56.5% for under 18 years, 50.2% for 19–25 years,
here we have chosen ‘high’.
40.7% for 26–35 years to, at its ­lowest, 35% for
36–50 years.

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 16 Chapter 1 ■ Investigating associations between two variables 1B

Exercise 1B
Constructing a two-way frequency table
Example 5 1 The following data were obtained when a sample of 20 Year 12 students were asked if

SF
they intended to go to university. The sex of the student was also recorded.

Student Sex Intend to go to Student Sex Intend to go to

No. university No. university
1 F Yes 11 F Yes
2 M Yes 13 M Yes
3 F No 13 F No
4 F Yes 14 F Yes
5 M No 15 M No
6 M Yes 16 M Yes
7 F Yes 17 F Yes
8 M No 18 M No
9 F No 19 F No
10 F Yes 20 F Yes
a Identify which variable is the explanatory variable and which is the response
variable.
b Create a two-way frequency table from the data, with the values of the explanatory
variable labelling the columns.

2 The following data were obtained when a sample of 30 adults were asked if they
supported reducing university fees. They were also classified by their age group 17–18
years, 19–25 years, or 26 years or more. The results are given in the table below.

Age group Reduce fees Age group Reduce fees Age group Reduce fees
17–18 Yes 26 or more Yes 26 or more No
19–25 Yes 17–18 Yes 19–25 Yes
26 or more No 19–25 Yes 17–18 No
17–18 Yes 17–18 Yes 26 or more Yes
19–25 Yes 17–18 Yes 17–18 No
26 or more Yes 26 or more No 26 or more Yes
17–18 Yes 19–25 Yes 19–25 Yes
19–25 No 26 or more Yes 17–18 Yes
26 or more No 17–18 No 19–25 No
19–25 No 17–18 Yes 26 or more Yes

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 1B 1B Investigating associations between two categorical variables 17  

a Identify which variable is the explanatory variable and which is the response
variable.
b Create a two-way frequency table from these data, with the values of the
explanatory variable labelling the columns.
c Calculate the column percentages for the table.

Using two-way tables to identify and describe associations between two

categorical variables
Example 7 3 A survey was conducted with 242 university students. For this survey, data were

CF
collected on the students’ enrolment status (full-time, part-time) and whether or not
each drinks alcohol (‘Yes’ or ‘No’). Their responses are summarised in the table
below.

Drinks Enrolment status (%)

alcohol Full-time Part-time
Yes 80.5 81.8
No 19.5 18.2
Total 100.0 100.0

a Which variable is the explanatory variable?

b Is there an association between drinking alcohol and enrolment status? Write a
brief report quoting appropriate percentages.

4 It has been suggested that females might be more satisfied with their lives overall than
males. Data were collected from a sample of 360 adults and are summarised in the
two-way frequency table below.
Sex of respondent
Are you satisfied with Female Male Total
your life overall?
Yes 153 155 308
No 24 28 52
Total 177 183 360

a Identify which variable is the explanatory variable and which is the response
variable.
b Does the data support the suggestion that females are more satisfied with their
lives than males? Write a brief report quoting appropriate percentages.

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 18 Chapter 1 ■ Investigating associations between two variables 1B

Example 6 5 The table below was constructed from data collected to see if handedness (left, right)
was associated with sex (male, female).

Sex%
Handedness Male Female
Left 22 16
Right 222 147

a Which variable is the response variable?

b Convert the table to percentages by calculating column percentages.
c Is handedness associated with sex? Write a brief report using appropriate percentages.

6 A survey was conducted with 59 male and 51 female university students to determine
whether, each day, they exercised, ‘regularly’, ‘sometimes’ or ‘rarely’. Their
responses are summarised in the table below.

Sex%
Exercised Male Female
Rarely 28.8 39.2
Sometimes 52.5 54.9
Regularly 18.6 5.9
Total 99.9 100.0

a Which is the explanatory variable?

b What percentage of females exercised sometimes?
c Is there an association between how regularly these students exercised and their
sex? Write a brief report quoting appropriate percentages

7 Are those people who are satisfied with their job more likely to be satisfied with
their life? Data collected from a survey of 110 adults are summarised in the two-way
frequency table below.

Satisfaction with job

Satisfaction with life Dissatisfied Satisfied Total
Dissatisfied 36 14 50
Satisfied 12 48 60
Total 48 62 110

a Identify which variable is the explanatory variable and which is the response variable.
b Does the data support the contention that people who are satisfied with their
job are more likely to be satisfied with their life? Write a brief report quoting
appropriate percentages.

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 1B 1B Investigating associations between two categorical variables 19  

8 It was suggested that students in Dr Evan’s mathematics class would achieve higher
grades than students in Dr Smith’s mathematics class. Write a brief report on the
association between teacher and grade, based on the data summarised in the following
table.

Class
Exam grade Dr Evans Dr Smith Total
Fail 2 3 5
Pass 11 20 31
Credit or above 5 9 14
Total 18 32 50

9 Researchers predicted that using a special pillow would be more effective in curing
snoring than treatment with drugs. Discuss the association between outcome of
treatment and type of treatment shown in the following table.

Type of treatment
Outcome of treatment Drug Pillow Total
Complete cure 4 10 14
Partial cure 11 12 23
No improvement 26 10 36
Total 41 32 73

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 20 Chapter 1 ■ Investigating associations between two variables

1C Displaying bivariate data from two numerical variables –

the scatterplot
In this and the following sections of this chapter, we will start to look at techniques for
investigating and understanding the relationship between two numerical variables.
The first step in investigating the association between two numerical variables is to
construct a scatterplot. We will illustrate the process by constructing a scatterplot to display
average hours worked (the RV) against university participation rate (the EV) in nine
countries. The data are shown below.

Participation rate (%) 26 20 36 1 25 9 30 3 55

Hours worked 35 43 38 50 40 50 40 53 35

▶▶Constructing a scatterplot 55
In a scatterplot, each point represents a single case; 50
in this instance, a country. The horizontal or Hours worked
x-coordinate of the point represents the university 45
participation rate (the EV). The vertical or 40
y-coordinate represents the average hours worked (26, 35)
35
(the RV).
The scatterplot opposite shows the point for a country 30
0
for which the university participation rate is 26% and 0 10 20 30 40 50
average hours worked is 35. Participation rate (%)

The points for each of the remaining countries are 55

then plotted, as shown opposite. 50
Hours worked

45
Which axis?
40
When constructing a scatterplot, it is conventional
35
to use the vertical or y-axis for the response
30
variable (RV) and the horizontal or x-axis for the
explanatory variable (EV). 0
0 10 20 30 40 50 60
Participation rate (%)
Note: Following this convention will become very important
when we begin fitting lines to scatterplots in the next chapter,
so it is a good habit to get into from the start.

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 1C Displaying bivariate data from two numerical variables – the scatterplot 21  

Example 8 Constructing a scatterplot using graph paper

The following table gives the time in minutes it takes for a headache to respond to
medication together with the dose of the medication received by a group of 10 patients.
Construct a scatterplot of these data.

Patient 1 2 3 4 5 6 7 8 9 10
Dose (mg) 0.5 1.2 4.0 5.3 2.6 3.7 5.1 1.7 0.3 4.0
Response time 65 35 15 10 22 16 10 18 70 20
(mins)

Solution
1 Which variable will be on which Dose is the EV – this will label the horizontal
axes? It is likely that the response axis. Response time is the RV – this will label the
time may be explained by the drug vertical axis.
dosage.
2 Detemine the scales for each axis. Dose ranges from 0.3 mg to 5.3 mg. A horizontal
scale from 0 to 6 with intervals of 1 mg would be
suitable.
Response time ranges from 10 mins to 70 mins. A
­vertical scale from 0 mins to 70 mins with intervals
of 10 mins would be suitable.
3 Set up the axes, and then plot the data 70
from the first patient (0.5, 65). 60
Response time (mins)

50
40
30
20
10
0
0 1.0 2.0 3.0 4.0 5.0 6.0
Dose (mg)
4 Complete the graph, adding all ten 70
data points. 60
Response time (mins)

50
40
30
20
10
0
0 1.0 2.0 3.0 4.0 5.0 6.0
Dose (mg)

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 22 Chapter 1 ■ Investigating associations between two variables

Example 9 Constructing a scatterplot using Excel

Use the data in the following table to construct a scatterplot of the height (RV) of 20
adults against arm span, which is the distance between a person’s fingertips on each hand
when the arms are outspread (EV).

Subject Arm span Height Subject Arm span Height

1 150 158 11 177 173
2 157 160 12 177 176
3 159 162 13 178 178
4 160 157 14 184 180
5 161 160 15 188 189
6 161 162 16 188 187
7 165 166 17 188 181
8 170 170 18 188 192
9 170 167 19 194 193
10 173 176 20 200 186

Solution
1 Enter the data into two columns B and C as shown below. Make sure that you save the
data for use in later examples.
2 Select both columns (including heading) and on the Insert tab, in the Charts group,
click Scatter.
3 Double click on each scale separately and edit to cover the range of the data.
4 Axis labels can be added using the Add Chart Elements option when editing the scale.
Spreadsheet

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 1C 1C Displaying bivariate data from two numerical variables – the scatterplot 23  

Exercise 1C
Save any scatterplots constructed in this section for use in later exercises.

The elements of a scatterplot

1 The scatterplot below has been constructed to investigate the association between the

SF
airspeed (in km/h) of commercial aircraft and the number of passenger seats.
850
825
800
Airspeed (km/h)

775
750
725
700
675
50 100 150200250300350400450
Number of seats
Use the scatterplot to answer the following questions.
a Which is explanatory variable?
b What type of variable is airspeed?
c How many aircraft were investigated?
d What was the airspeed of the aircraft that could seat 300 passengers?

Constructing a scatterplot using graph paper

Example 8 2 The table below shows the maximum and minimum temperatures in Toowoomba
during one six-day period.

Day 1 2 3 4 5 6
Minimum temperature (°C) 17.7 19.8 23.3 22.4 22.0 25.6
Maximum temperature (°C) 29.4 34.0 34.5 35.0 36.9 36.4

Use a sheet of graph paper to complete the following.

■■ Construct a set of axes.
■■ Use a scale on the x-axis starting at 16°C and ending at 27°C, with increments of 1°C.
■■ Use a scale on the y-axis starting at 26°C and ending at 38°C, with increments of 1°C.
■■ Plot the maximum temperature against the minimum temperature for each of the
six days.

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 24 Chapter 1 ■ Investigating associations between two variables 1C

3 The price and age of several secondhand dirt bikes is listed in the table.

Age (years) Price ($) Age (years) Price ($)

7 4800 11 1650
10 5700 4 6900
7 3900 3 9600
9 1950 8 6500
8 4275 4 8400
9 3300 1 11 400
9 3900 7 6600

a Determine which is the explanatory variable and which is the response variable.
b Construct a scatterplot of the price of the dirt bikes against their age.

Constructing a scatterplot using Excel

Example 9 4 The proprietor of a hairdressing salon recorded the amount spent advertising in the
local paper, and the volume of business undertaken for each month for a year, with the
following results.

Month Advertising ($) Volume of business ($)

1 3500 28 350
2 4500 30 210
3 4000 28 140
4 5000 27 330
5 2500 15 660
6 1500 9300
7 3500 24 180
8 3000 21 090
9 5500 34 500
10 6000 38 610
11 5500 31 680
12 4500 29 550

a Determine which is the explanatory variable and which is the response variable.
b Construct a scatterplot of the volume of business conducted against the amount
spent on advertising.

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 1C 1C Displaying bivariate data from two numerical variables – the scatterplot 25  

5 The table below shows the number of runs scored and the number of balls faced
by batsmen in a one-day international cricket match. Identify the RV and the EV.
Construct a scatterplot of this data.

Balls faced 29 16 19 62 13 40 16 9 28 26 6
Runs scored 27 8 21 47 3 15 13 2 15 10 2

6 The table below shows the changing diameter of a metal ball as it is heated. Identify
the RV and the EV. Construct a scatterplot of this data.

Temperature (°C) 0 10 50 75 100 150

Diameter (cm) 2.00 2.02 2.11 2.14 2.21 2.28

7 The table below shows the number of people in a movie theatre at 5-minute intervals
after the advertisements started. Identify the RV and the EV. Construct a scatterplot of
this data.

Number in theatre 87 102 118 123 135 137

Time (minutes) 0 5 10 15 20 25

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 26 Chapter 1 ■ Investigating associations between two variables

1D Interpreting a scatterplot
What features do we look for in a scatterplot that will help us to identify and describe any
relationships present? First, we look to see if there is a clear pattern in the scatterplot.
In the example below, there is no clear pattern in the points. The points are randomly
scattered across the plot, so we conclude that there is no relationship.

For the three examples below, there is a clear (but different) pattern in each set of points, so
we conclude that there is a relationship in each case.
y y y

x        x        x

After finding a clear pattern, we need to be able to describe these relationships clearly, as
they are obviously different. To do this, there are several things we look for in the pattern of
points:

■■direction and outliers

■■form
■■strength.
We will consider each of these attributes of the scatterplot in turn.

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 1D Interpreting a scatterplot 27  

▶▶Direction of an association and outliers

The scatterplot of height against age for a group of 205
footballers (shown opposite) is just a random scatter
of points. This suggests that there is no association 195

Height (cm)
between the variables height and age for this group of
185
footballers. However, there is an outlier; the footballer
who is 201 cm tall. 175

165
16 18 20 22 24 26 28 30 32
Age (years)

In contrast, there is a clear pattern in the scatterplot 100

of weight against height for these footballers
(shown opposite). The two variables are associated. 90

Weight (kg)
Furthermore, the points drift upwards as you move
80
across the plot. When this happens, we say that
there is a positive association between the variables. 70
Tall players tend to be heavy and vice versa. In this
scatterplot, there are no outliers. 60
170 180 190 200 210
Height (cm)

Likewise, the scatterplot of working hours against 50

university participation rates for 15 countries shows
a clear pattern. The two variables are associated. 45
Hours worked

However, in this case the points drift downwards as

you move across the plot. When this happens, we 40
say that there is a negative association between the
35
variables. Countries with high working hours tend to
have low university participation rates and vice 30
versa. In this scatterplot, there are no outliers. 0 10 20 30 40 50 60
Participation rate (%)

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 28 Chapter 1 ■ Investigating associations between two variables

Example 10 Classifying the direction of an association

Classify each of the following scatterplots as exhibiting positive, negative or no association.

Where there is an association, describe the direction of the association in terms of the
variables in the scatterplot and interpret what this means in terms of the variables involved.
a 70 b 25
Reaction time (min)

60

Diameter (cm)
20
50
15
40
30 10
20 5
10
0 0
18 20 22 24 26 28 30 32 3436
0 1 2 3 4 5 6
Dose (mg) Age (years)
c 180
Height daughter (cm)

170

160

150

0
140 150 160 170 180
Height mother (cm)

Solution
a There is a clear pattern in the scatterplot. The direction of the association is negative.
The points in the scatterplot drift Reaction times tend to decrease as the drug dose
downwards from left to right. increases.
b There is no pattern in the scatterplot of There is no association between diameter and age.
diameter against age.
c There is a clear pattern in the scatterplot. The direction of the association is positive. Taller
The points in the scatterplot drift mothers tend to have taller daughters.
upwards from left to right.

In general terms, we can interpret the direction of an association as follows.

Direction of an association

■■ Two variables have a positive association when the value of the response variable
tends to increase as the value of the explanatory variable increases.
■■ Two variables have a negative association when the value of response variable tends
to decrease as the value of the explanatory variable increases.
■■ Two variables have no association when there is no consistent change in the value of
the response variable when the values of the explanatory variable increases.

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 1D Interpreting a scatterplot 29  

▶▶Form of an association
What we are looking for is whether the pattern in the points has a linear form. If the
points in a scatterplot appear to be as random fluctuations around a straight line, then
we say that the scatterplot has a linear form, then we say that the variables are linearly
associated.
For example, both of the scatterplots below can be described as having a linear form; that
is, the scatter in the points can be thought of as random fluctuations around a straight line.
We can say that the associations between the variables involved are linear. (The dotted lines
have been added to the graphs to make it easier to see the linear form.)

55

50

Average working hours

30
25 45
Velocity (m/s)

20
40
15
10 35
5
0 30
0 1 2 3 4 5 0 10 20 30 40 50 60
Time (s)          University participation (%)

By contrast, consider the scatterplot below, plotting performance level against time spent
practising a task. There is an association between performance level and time spent
practising, but it is clearly non-linear.
The scatterplot shows that while level of performance on a task increases with practice,
there comes a time when the performance level will no longer improve substantially with
extra practice.
5
Performance level

0
0 1 2 3 4 5 6 7 8 9 10
Time spent practising

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 30 Chapter 1 ■ Investigating associations between two variables

Example 11 Classifying the form of an association

Classify the form of the association in each scatterplot as linear or non-linear.

a 180 b 14
12
Height daughter (cm)

Weight loss (kg)

170 10
8
160 6
4
150 2
0
0
0 150 160 170 180 2 3 4 5 6 7
Height mother (cm) Number of weeks on a diet

Solution
a There is a clear pattern. The association is linear.
The points in the scatterplot can be
imagined to be scattered around a
straight line.
b There is as a clear pattern. The association is non-linear.
The points in the scatterplot can be
imagined to be scattered around a curved
line rather than a straight line.

▶▶Strength of an association
The strength of an association is the measure of how much scatter there is in the
scatterplot.

Strong association
When there is a strong association between the variables, a pattern is clearly seen. There is
only a small amount of scatter in the plot.

Strong positive association Strong positive association Strong negative association

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 1D Interpreting a scatterplot 31  

Moderate association
As the amount of scatter in the plot increases, the pattern becomes less clear. This indicates
that the association is less strong. In the examples below, we might say that there is a
moderate association between the variables.

  

Moderate positive association Moderate positive association Moderate negative association

Weak association
As the amount of scatter increases further, the pattern becomes even less clear. This
indicates that any association between the variables is weak. The scatterplots below are
examples of weak association between the variables.

Weak positive association Weak positive association Weak negative association

No association
Finally, when all we have is scatter, as seen in the scatterplots below, no pattern can be seen.
In this situation we say that there is no association between the variables.

No association No association No association

The scatterplots above should help you to get a feel for the strength of an association
from the amount of scatter. At the moment, you only need be able to estimate the strength
of an association as strong, moderate, weak or none, by comparing it with the standard
scatterplots given above. In the next section, you will learn about a statistic, the correlation
coefficient, that can be used to give a value to the strength of linear association.

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 32 Chapter 1 ■ Investigating associations between two variables 1D

Example 12 Assessing the strength of an association

Assess the strength of the relationship in each of the following scatterplots as no

association, weak association, moderate association or strong association.
a b c

Solution
Compare each of these scatterplots to the a moderate
previous examples to classify the associations b strong
as weak, moderate, strong or none. c weak

Exercise 1D
Assessing the direction of an association from the variables
Example 10 1 For each of the following pairs of variables, indicate whether you expect an

CF
association to exist between the variables. If associated, say whether you would expect
the variables to be positively or negatively associated.
a intelligence and height
b level of education and salary level
c salary and tax paid
d frustration and aggression
e population density and distance from the city centre
f time using social media and time spent studying

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 1D 1D Interpreting a scatterplot 33  

Using a scatterplot to classify the direction, form and strength of an

association
Example 10–12 2 For each of the following scatterplots, state whether the variables appear to be related.

SF
If the variables appear to be related:
a state whether the association is positive or negative
b classify the association as linear or non-linear
c classify the strength of the association as weak, moderate, strong or no
association.
i 160 ii 110
Lung cancer mortality

Aptitude test score

140
120 100
100
80 90
60
40 80
60 80 100 120 140 6 8 10 12 14 16 18 20
Smoking rate Age (months)

iii 14 iv 20
Calf measurement

15
CO level

12
10
10
5
8 0
50 100 150 200 250 300 350 400 20 30 40 50
Traffic volume Age (years)

3 The table below shows the maximum and minimum temperatures in Toowoomba
during one six-day period.

Day 1 2 3 4 5 6
Minimum temperature (°C) 17.7 19.8 23.3 22.4 22.0 22.0
Maximum temperature (°C) 29.4 34.0 34.5 35.0 36.9 36.4

Use the scatterplot constructed in Exercise 1C, question 2 to complete the following.
a State whether the association is positive or negative.
b Is the association linear or non-linear?
c Classify the strength of the association as weak, moderate, strong or no association.

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 34 Chapter 1 ■ Investigating associations between two variables 1D

4 The proprietor of a hairdressing salon recorded the amount spent advertising in the
local paper, and the volume of business undertaken for each month for a year, with the
following results.

Month Advertising ($) Volume of business ($)

1 5000 28 350
2 6000 30 210
3 4000 28 140
4 5000 27 330
5 2500 15 660
6 1500 9300
7 4000 24 180
8 3000 21 090
9 5500 34 500
10 7000 38 610
11 5500 31 680
12 4500 29 550

Use the scatterplot constructed in Exercise 1C, question 4 to complete the following.
a State whether the association is positive or negative.
b Is the association linear or non-linear?
c Classify the strength of the association as weak, moderate, strong or no association.

5 The price and age of several secondhand dirt bikes are listed in the table.

Age (years) Price ($) Age (years) Price ($)

7 4800 11 1650
10 5700 4 6900
7 3900 3 9600
9 1950 8 6500
8 4275 4 8400
9 3300 1 11 400
9 3900 7 6600

Use the scatterplot constructed in Exercise 1C, question 3 to complete the following.
a State whether the association is positive or negative.
b Is the association linear or non-linear?
c Classify the strength of the association as weak, moderate, strong or no association.

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 1D 1D Interpreting a scatterplot 35  

6 The following table gives the age at marriage of sixteen couples.

Wife’s age Husband’s age Wife’s age Husband’s age

26 29 23 27
22 26 27 27
29 43 31 36
17 21 20 20
27 33 27 26
22 24 35 25
21 22 20 25
23 28 21 19

a Plot the age at marriage of the wife against the age at marriage of the husband.
b State whether the association is positive or negative. Identify any outliers.
c Is the association linear or non-linear?
d Classify the strength of the association as weak, moderate, strong or no association.

7 A sample of 12 adult males gave the following data for height and weight.

Height (cm) Weight (kg)

190 77
185 74
183 73
188 77
176 70
163 54
178 65
185 95
185 65
190 76
160 75
185 79

a Plot the weight against height for these adult males.

b State whether the association is positive or negative. Identify any outliers.
c Is the association linear or non-linear?
d Classify the strength of the association as weak, moderate, strong or no association.

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 36 Chapter 1 ■ Investigating associations between two variables

1E A measure of strength for a linear relationship – the

correlation coefficient
The strength of a linear association is an indication of how closely the points in the
scatterplot fit a straight line. If the points in the scatterplot lie exactly on a straight line,
we say that there is a perfect linear association. If there is no fit at all, we say there is no
association. In general, we have an imperfect fit, as seen in all of the scatterplots to date.
To measure the strength of a linear relationship, a statistician called Carl Pearson
developed a correlation coefficient, r, which has the following properties.

■■If there is no linear ■■If there is a perfect ■■If there is a perfect

association, r = 0. positive linear negative linear
association, r = +1. association, r = −1.

r=0 r = +1 r = –1

Pearson’s correlation coefficient:

■■measures the strength of a linear relationship, with larger values indicating stronger
relationships
■■ has a value between –1 and +1
■■ is positive if the direction of the linear relationship is positive
■■ is negative if the direction of the linear relationship is negative.
If there is a less than perfect linear association, then the correlation coefficient, r, has a
value between –1 and +1, or –1 < r < + 1. The scatterplots below show approximate values
of r for linear associations of varying strengths.

r = –0.7 r = +0.5 r = –0.3 r = +0.9

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 1E A measure of strength for a linear relationship – the correlation coefficient 37  

▶▶Calculating the correlation coefficient

Skillsheet The correlation coefficient measures the extent to which two variables tend to vary together.
It is based on the covariance of the two variables.
You are already familiar with concepts of the sample variance and sample standard
deviation as measures of variability of a single variable. Recall, for a variable, X, the
definitions of variance:
(x − x) 2
s2x = ∑
n−1

and standard deviation:

sx = √ ∑
(x − x) 2
n−1

The sample covariance between two variables X and Y is defined as:

(x − x)(y − y)
sxy = ∑
n−1

You can see from the formula that if the values of X and Y tend to increase together, the
value of the covariance will also increase. In fact, sample covariance may have any positive
or negative value, and this is a problem with its interpretation. A large covariance can mean
a strong association between variables, but it is influenced by the scale of the variables.
Larger X or Y values give larger values for the covariance. To allow for this we divide the
covariance by the standard deviation for each of the variables, giving us the formula for the
correlation coefficient.

The correlation coefficient

sxy
rxy =
sxsy
where:

■■ rxy = sample correlation between X and Y

■■ sxy = sample covariance between X and Y
■■ sx = sample standard deviation of X
■■ sy = sample standard deviation of Y

The advantage of the correlation coefficient is that while covariance can take on any
numerical value, the correlation is limited to values between −1 and +1, and it can be
compared between any variables regardless of the unit of measurement used for each
variable.

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 38 Chapter 1 ■ Investigating associations between two variables

Example 13 Calculating the correlation coefficient from covariance and standard

deviation

Suppose the variance of X is 9, the variance of Y is 16, and the covariance of X and Y
is 9. Find the value of r, the correlation between X and Y.

Solution
sxy
1 Write down the formula for r. rxy =
sxsy
2 From the information in the question, we Var (X) = 9, so sx = √9 = 3
can determine the values of the standard Var(Y) = 16, so sy = √16 = 4
deviations of x and y.
3 Write down the value of the covariance. sxy = 9
9
4 Substitute in the formula to determine the rxy = = 0.75
value of r, the correlation coefficient.
(3 × 4)

Example 14 Calculating the correlation coefficient from first principles

Use the formula to calculate the correlation coefficient, r, for the following data.
x 1 3 5 4 7 x = 4, sx = 2.236
     
y = 5, sy = 3.082
y 2 5 7 2 9
Give the answer correct to two decimal places.
Solution
1 Write down the values x = 4 sx = 2.236
of the means, standard y = 5 sy = 3.082 n = 5
deviations and n.
2 Set up a table
x (x − x) y (y − y) (x − x) × (y − y)
like that shown
opposite to calculate 1 −3 2 −3 9
− x)(y − y).
3 −1 5 0 0
∑ (x
5 1 7 2 2
4 0 2 −3 0
7 3 9 4 12
Sum 0 0 23
∴ ∑ (x − x)(y − y) = 23

sxy = ∑
(x − x)(y − y) 23
3 Determine the value of = = 5.75
the covariance sxy. n−1 4
5.75
4 Determine the value of r= = 0.83 (to two decimal places)
2.236 × 3.082
correlation coefficient r.

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 1E A measure of strength for a linear relationship – the correlation coefficient 39  

Calculator activity 1E Using a calculator to find the correlation coefficient

Task
Use a calculator to find the correlation coefficient for the following set of bivariate data.

X 1 3 5 4 7
Y 2 5 7 2 9

Casio fx82
Change the mode to statistics with two random variables.
Press > 2 > 2 and you should get a table like this:

x y
1
2
3
Insert the first x data value by pressing 1 then . Continue inserting the rest of the
x data values similarly until they are all entered.
Use the arrow keys (on the blue circular button near the screen) to navigate to the y column
and insert the y data values similarly, ensuring that each observation aligns correctly.
Leave table by pressing

Press > 1 [ STAT] > 5 [ Reg] > 3 [ r] > to get the following result:

r
0.8342976876

TI-30XB
Press to move to a data entry table.
Insert the first x data value by pressing 1 then and continue inserting the rest of the x
data values. Move to the second column by pressing and then put in the y data values,
ensuring that they match up with their respective x values. When finished, press
to exit the table.
Press > [ stat] > 2 > · · ·
Use the arrow keys on the top right circular button to navigate to the correlation
coefficient r.
Press · · and you should get:

r
0.8342976876

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 40 Chapter 1 ■ Investigating associations between two variables

Sharp
Enter statistics mode for (x, y) observations by pressing 11
Insert the first (x, y) observation by pressing 1 > [ (x, y) ] > 2 > [DATA]
and continue following the same process for the other observations.
Press > p [ r] > and you should get:

r=
0.8342976876

The CORREL function in Excel can be used to find the correlation coefficient between two
variables, as shown in the following example.

Example 15 Calculating the correlation coefficient using Excel

Use the data from Example 9 to calculate the correlation coefficient between height and
arm span for a group of 20 adults.
Note: The data can be seen in the spreadsheet below.

Solution
1 Enter the data into two columns B and C as shown below.
2 In an empty cell enter the formula ‘=CORREL(B2:B21,C2:C21)’.
3 Press Enter and the value of the correlation will be shown in that cell.
Spreadsheet

4 The correlation coefficient is 0.95 (to two decimal places).

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 1E A measure of strength for a linear relationship – the correlation coefficient 41  

▶▶Guidelines for classifying the strength of a linear relationship

using the correlation coefficient
The correlation coefficient, r, can be used to classify the strength of a linear association as
follows.

strong positive linear association 0.75 ⩽ r ⩽ 1

moderate positive linear association 0.50 ⩽ r < 0.75
weak positive linear association 0.25 ⩽ r < 0.50
no linear association −0.25 < r < 0.25
weak negative linear association −0.50 < r ⩽ −0.25
moderate negative linear association −0.75 < r ⩽ −0.50
strong negative linear association −1 ⩽ r ⩽ −0.75

Example 16 Classifying the strength of a linear relationship using the correlation

coefficient

Classify the strength of each of the following values of the correlation coefficient
according to the previous table:
a r = −0.08 b r = 0.80 c r = 0.56 d r = −0.3

Solution
a r = −0.08 lies in the interval −0.25 < r < 0.25 No linear association
b r = 0.80 lies in the interval 0.75 ⩽ r ⩽ 1 Strong positive linear association
c r = 0.56 lies in the interval 0.50 ⩽ r < 0.75 Moderate positive linear association
d r = −0.3 lies in the interval −0.50 < r ⩽ −0.25 Weak negative linear association

Warning
If you use the value of the correlation coefficient as a measure of the strength of an
­association, you are implicitly assuming that:
1 the variables are numeric
2 the association is linear
3 there are no outliers in the data.
The correlation coefficient can give a misleading indication of the strength of the linear
association if there are outliers present.

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 42 Chapter 1 ■ Investigating associations between two variables 1E

Exercise 1E
Basic ideas
1 The scatterplots of three sets of related variables are shown.

CF
Scatterplot A      Scatterplot B   

Scatterplot C
a For each scatterplot, describe the association in terms of strength, direction, form
and outliers (if any).
b For which of these scatterplots would it be inappropriate to use the correlation
coefficient, r, to give a measure of the strength of the association between the
variables? Give reasons.

Example 13 2 Suppose the variance of X is 5, the variance of Y is 6, and the covariance of X and Y

SF
is 3. Find the value of r, the correlation between X and Y.

3 If sx = 3.55, sy = 1.79 and sxy = 4.75, find the correlation coefficient r.

4 If r = 0.75, sx = 0.85 and sy = 0.45, what is the covariance of X and Y?

Calculating r using the formula

Example 14 5 Use the formula to calculate the correlation coefficient, r, correct to two decimal places.
x 2 3 6 3 6 x = 4, sx = 1.871
y 1 6 5 4 9 y = 5, sy = 2.915

6 Use the formula to calculate the correlation coefficient, r, correct to three decimal places.

x 1 2 4 6 7 sx = 2.5495, sy = 4.0373
y 0 2 3 7 10

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 1E 1E A measure of strength for a linear relationship – the correlation coefficient 43  

7 a T
 he table below shows the maximum and minimum temperatures during a heat-
wave. The maximum and minimum temperature each day are linearly associated.
Use your calculator to show that r = 0.818, correct to three decimal places.

Day Sunday Monday Tuesday Wednesday Thursday Friday

Maximum ( ∘ C) 29.4 34.0 34.5 35.0 36.9 36.4
Minimum ( ∘ C) 17.7 19.8 23.3 22.4 22.0 22.0

b This table shows the number of runs scored and balls faced by batsmen in a cricket
match. Runs scored and balls faced are linearly associated. Use your calculator to
show that r = 0.8782, correct to four decimal places.

Batsman 1 2 3 4 5 6 7 8 9 10 11
Runs scored 27 8 21 47 3 15 13 2 15 10 2
Balls faced 29 16 19 62 13 40 16 9 28 26 6

c This table shows the hours worked and university participation rate (%) in six
countries. Hours worked and university participation rate are linearly associated.
Use your calculator to show that r = −0.6727, correct to four decimal places.

Country Australia Britain Canada France Sweden US

Hours worked 35.0 43.0 38.2 39.8 35.6 34.8
Participation rate (%) 26 20 36 25 37 55

Example 16 8 The price and age of several

Age (years) Price ($)
secondhand dirt bikes is listed in the
7 4800
table.
10 5700
a Calculate the value of the
7 3900
correlation coefficient, giving your
9 1950
answer correct to three decimal
8 4275
places.
9 3300
b Classify the strength of the
association according the table on 9 3900
page 41. 11 1650
4 6900
3 9600
8 6500
4 8400
1 11 400
7 6600

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 44 Chapter 1 ■ Investigating associations between two variables 1E

9 The following table gives the age at marriage of sixteen couples.

Wife’s age Husband’s age

26 29
22 26
29 43
17 21
27 33
22 24
21 22
23 28
23 27
27 27
31 36
20 20
27 26
35 25
20 25
21 19

a Calculate the value of the correlation coefficient, giving your answer correct to
three decimal places.
b Classify the strength of the association according the table on page 41.

10 A sample of 12 adult males gave the following data for height and weight.

Height (cm) Weight (kg)

190 77
185 74
183 73
188 77
176 70
163 54
178 65
185 95
185 65
190 76
160 75
185 79
a Calculate the value of the correlation coefficient, giving your answer correct to
three decimal places.
b Classify the strength of the association according the table on page 41.

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 1F The coefficient of determination 45  

1F The coefficient of determination

▶▶Introduction
If two variables are associated, it is possible to estimate the value of one variable from
that of the other. For example, people’s weights and heights are associated. Thus, given a
person’s height, we can roughly predict their weight. The degree to which we can make
such predictions depends on the value of r. If there is a perfect linear association (r = 1)
between two variables, we can make an exact prediction.
For example, when you buy cheese by the gram there is an exact association between the
weight of the cheese and the amount you pay (r = 1). At the other end of the scale, there is
no association between an adult’s height and their IQ (r ≈ 0). So knowing an adult’s height
will not enable you to predict their IQ any better than guessing.

The coefficient of determination

The degree to which one variable can be predicted from another linearly related variable
is given by a statistic called the coefficient of determination.
The coefficient of determination is denoted as R2 and calculated by squaring the
correlation coefficient:
coefficient of determination, R2 = r2

▶▶Calculating the coefficient of determination

If the correlation between weight and height is r = 0.8, then:
R2 = coefficient of determination = 0.82 = 0.64 or 0.64 × 100 = 64%
Note: We have converted the coefficient of determination from a decimal into a percentage (64%) as this
is the most useful form when we come to interpreting the coefficient of determination.

▶▶Interpreting the coefficient of determination

We now know how to calculate the coefficient of determination, but what does it tell us?

Interpreting the coefficient of determination

The coefficient of determination (as a percentage) tells us the variation in the response
variable that is explained by the variation in the explanatory variable.

But what does this mean in practical terms?

Let’s take the relationship between weight and height that we just considered. Here the
coefficient of determination is 0.64 (or 64%).

The coefficient of determination tells us that 64% of the variation in people’s weights is
explained by the variation in their heights.

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 46 Chapter 1 ■ Investigating associations between two variables

What do we mean by ‘explained’?

If we take a group of people, their weights and heights will vary. One explanation is that
taller people tend to be heavier and shorter people tend to be lighter. The coefficient of
determination tells us that 64% of the variation in people’s weights can be explained by the
variation in their heights. The rest of the variation (36%) in their weights will be explained
by other factors, such as sex, lifestyle, build.

Example 17 Calculating the correlation coefficient from the coefficient of

determination

For the relationship described by this scatterplot, the

coefficient of determination = 0.5210.
Determine the value of the correlation coefficient, r.

Solution
1 The coefficient of determination = R2. Use R2 = 0.5210
the value of the coefficient of determination ∴ r = ±√0.5210 = ±0.7218
to set up an equation for R2. Then solve.
2 There are two solutions, one positive and the Scatterplot indicates a negative association.
other negative. Use the scatterplot to decide
which applies.
3 Write down your answer. ∴ r = −0.7218

Example 18 Calculating and interpreting the coefficient of determination

Carbon monoxide (CO) levels in the air and traffic volume are linearly related, with:
rCO level, traffic volume = +0.985
Determine the value of the coefficient of determination, write it in percentage terms and
interpret. In the relationship, traffic volume is the explanatory variable.

Solution
The coefficient of determination is:
R2 = (0.985) 2 = 0.970... or 0.970 × 100 = 97.0%
Therefore, 97% of the variation in carbon monoxide levels in the air can be explained by the variation
in traffic volume.

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 1F The coefficient of determination 47  

Clearly, traffic volume is a very good predictor of carbon monoxide levels in the air. Thus,
knowing the traffic volume enables us to predict carbon monoxide levels with a high degree
of accuracy. This contrasts with the next example which concerns predicting mathematical
ability from verbal ability.

Example 19 Calculating and interpreting the coefficient of determination

Scores on tests of verbal and mathematical ability are linearly related with:
rmathematical, verbal = +0.275
Determine the value of the coefficient of determination, write it in percentage terms and
interpret. In this relationship, verbal ability is the explanatory variable.

Solution
The coefficient of determination is:
R2 = (0.275) 2 = 0.0756. . . or 0.076 × 100 = 7.6%
Therefore, only 7.6% of the variation observed in scores on the mathematical ability test can be
explained by the variation in scores obtained on the verbal ability test.
Clearly, scores on the verbal ability test are not good predictors of the scores on the
­mathematical ability test; 92.4% of the variation in mathematical ability is explained by other
factors.

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 48 Chapter 1 ■ Investigating associations between two variables 1F

Exercise 1F
Calculating the coefficient of determination from r
1 For each of the following values of r, calculate the value of the coefficient of

SF
determination and convert to a percentage (correct to one decimal place).
a r = 0.675 b r = 0.345 c r = −0.567
d r = −0.673 e r = 0.124
Calculating r from the coefficient of determination given a scatterplot
Note: The scatterplots have been included in Question 2 to help you decide the sign of r .

Example 17 2 a F
 or the relationship described by the scatterplot shown,
the coefficient of determination, R2 = 0.8215.
Determine the value of the correlation coefficient, r (correct to three
decimal places).

b For the relationship described by the scatterplot shown,

the coefficient of determination R2 = 0.1243.
Determine the value of the correlation coefficient, r (correct to
three decimal places).
Calculating and interpreting the coefficient of determination
Example 18, 19 3 For each of the following, determine the value of the coefficient of determination,

CF
write it in percentage terms, and interpret.
a Scores on hearing tests and age (EV) are linearly related, with rhearing, age = −0.611.
b Mortality rates and smoking rates (EV) are linearly related, with
rmortality, smoking = 0.716.
c Life expectancy and birth rates (EV) are linearly related, with
rlife expectancy, birth rate = −0.807.
d Daily maximum (RV) and minimum temperatures are linearly related, with
rmax, min = 0.818
e Runs scored (RV) and balls faced by a batsman are linearly related, with
rruns, balls = 0.8782

4 A study was conducted where a group of 100 adults were asked to record their weekly
income, their weekly expenditure on food, and their weekly expenditure on leisure.
The researcher determined the following correlation coefficients:
rincome, food = 0.6 rincome, leisure = 0.5
a Calculate and interpret the coefficient of determination relating income and
expenditure on food.
b Calculate and interpret the coefficient of determination relating income and
expenditure on leisure.
c Write a sentence comparing the explanatory power of income in understanding
expenditure on food and expenditure on leisure.
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 Chapter 1 Review 49  

Review
Key ideas and chapter summary

Bivariate data Bivariate data are data in which each observation involves
AS recording information about two variables for the same
­person or thing. An example would be the heights and
weights of the children in a preschool.

Categorical and numerical Categorical variables generate data values which are labels,
variables numerical variables generate values which are numbers.

Explanatory and response The explanatory variable (EV) may explain the ­associated
variables changes in the response variable (RV).

Two-way frequency tables A two-way frequency table summarises bivariate data

obtained from two categorical variables. In a two-way
­frequency table, the columns are labelled with the values of the
EV, and the rows are labelled with the values of the RV.

Identifying associations Associations between two categorical variables are ­identified

between two variables by comparing percentages in a two-way ­percentage
­frequency table.
Associations between two numerical variables are ­identified
using a scatterplot.

Scatterplots A scatterplot is used to identify the relationship between

two numerical variables. In a scatterplot, the EV is ­plotted on
the horizontal axis, and the RV is plotted on the vertical axis.

Correlation coefficient r The correlation coefficient, r, gives a measure of the strength

of a linear relationship between two numerical variables.

Coefficient of The coefficient of determination, R2, gives the ­percentage

­determination R2 of variation in the RV that can be explained by the variation
in the EV.

Skills check
Having completed this chapter you should be able to:

■■ interpret the information contained in a two-way frequency table

■■ identify, where appropriate, the response and explanatory variable in a pair of related
variables
■■ identify associations in tabulated data by forming and comparing appropriate percentages

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 50 Chapter 1 ■ Investigating associations between two variables

■■ construct a scatterplot
Review

■■ use a scatterplot to describe an association between two numerical variables in terms of:
•• direction (positive or negative association) and possible outliers
•• form (linear or non-linear)
•• strength (weak, moderate, strong)
■■ calculate and interpret the correlation coefficient, r
■■ know the three key assumptions made when using Pearson’s correlation coefficient r as
a measure of the strength of the linear association between two variables; that is:
•• the variables are numerical
•• the association is linear
•• there are no clear outliers
■■ calculate and interpret the coefficient of determination.

Multiple-choice questions

Use the information in the following frequency table to answer Questions 1 to 4.

Sex
Plays sport Male Female
Yes 68 79
No 34
Total 102 175

1 The variables plays sport and sex are:

A both categorical variables
B a categorical and a numerical variable, respectively
C a numerical and a categorical variable, respectively
D both numerical variables
E neither numerical nor categorical variables

2 The number of females who do not play sport is:

A 21 B 45 C 79 D 96 E 175

3 The percentage of males who do not play sport is:

A 19.4% B 33.3% C 34.0% D 66.7% E 68.0%

4 The variables plays sport and sex appear to be associated because:

A more females play sport than males
B fewer males play sport than females
C a higher percentage of females play sport compared to males
D a higher percentage of males play sport compared to females
E both males and females play a lot of sport

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 Chapter 1 Review 51  

Review
Use the information in the following frequency table to answer Questions 5 and 6.
The results of a survey conducted with 578 secondary students are summarised in the
following table.

How important is it to obey rules?

How exciting is your life? Very Important Not Total
important important
Very exciting 50 84 44 178
Routine 103 169 56 328
Dull 25 42 5 72
Total 178 295 105 578

5 The percentage of students who think it is important to obey rules and who find life
dull is closest to:
A 14% B 58% C 7% D 51% E 12%

6 From this table, we can conclude there is a relationship between how exciting
respondents find their lives and how important they think it is to obey rules because:
A many more students find life to be very exciting than routine or dull
B the percentage of students who find life very exciting is highest for those who think it
is not important to obey rules (42% compared to 28% for the other two categories)
C the percentage of students who think it is not important to obey rules is highest
for those who think life is very exciting (42%), followed by 53% who think life is
routine, and 5% who say life is dull
D the percentage of students who find life routine is 57%, which is higher than those
who find it exciting (31%) or dull 12%
E there is no relationship evident in these data between these variables

7 The association between weight at age 21 (in kg) and weight at birth (in kg) is to be
investigated. The variables weight at age 21 and weight at birth are:
A both categorical variables
B a categorical and a numerical variable, respectively
C a numerical and a categorical variable, respectively
D both numerical variables
E neither numerical nor categorical variables

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 52 Chapter 1 ■ Investigating associations between two variables
Review

8 The scatterplot shows the weights of 12 women 65

Weight at 21 years (kg)

at birth and at the age of 21. The association is 60
best described as:
55
A weak, positive and linear
B weak, negative and linear 50
C moderate, positive and non-linear 45
D strong, positive and non-linear 40
E strong, positive and linear 1.5 2 2.5 3 3.5 4 4.5
Birth weight (kg)

9 The variables response time to a drug and drug dosage are linearly associated, with
r = −0.9. From this information, we can conclude that:
A response times are –0.9 times the drug dosage
B response times decrease with decreased drug dosage
C response times decrease with increased drug dosage
D response times increase with increased drug dosage
E response times are 81% of the drug dosage

10 The birth weight and weight at age 21 of eight women are given in the table below.

Birth weight (kg) 1.9 2.4 2.6 2.7 2.9 3.2 3.4 3.6
Weight at 21 (kg) 47.6 53.1 52.2 56.2 57.6 59.9 55.3 56.7

The value of the correlation coefficient is closest to:

A 0.536 B 0.6182 C 0.7863 D 0.8232 E 0.8954

11 If sx = 1.41, sy = 2.56 and sxy = −1.30, then the correlation coefficient r is:
A −0.13 B 0.13 C −0.36 D 0.36 E 0.71

12 The value of correlation coefficient is r = −0.7685. The value of the corresponding

coefficient of determination is closest to:
A −0.77 B −0.59 C 0.23 D 0.59 E 0.77

13 The correlation coefficient between heart weight and body weight in a group of mice
is r = 0.765.

Using body weight as the explanatory variable, we can conclude that:
A 58.5% of the variation in heart weight is explained by the variation in body
weights.
B 76.5% of the variation in heart weight is explained by the variation in body weights.
C heart weight is 58.5% of body weight
D heart weight is 76.5% of body weight
E 58.5% of the mice had heavy hearts

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 Chapter 1 Review 53  

Review
Short-answer questions
1 For each of the following questions, determine if they involve investigating

SF
associations between:
••
One numerical and one categorical variable or
••
Two categorical variables or
••
Two numerical variables

a Are females more likely to believe in Astrology than males?

b Do males tend to be heavier than females (weight measured in kg)?
c Are students who work more hours per week in paid employment less likely to get
high marks in their mathematics exam?

2 For each of the pairs of variables in Question 1 identify which is the explanatory
variable and which is the response variable.

Use the information in the following frequency table to answer questions 3–5
Are males and females in Year 12 equally likely to indicate an intention to go to
university? Data from interviews with 300 Year 12 students are summarised in the
following table.

Intend going to university Male Female Total

Yes 94 123 208
No 46 37 92
Total 140 160 300

3 Why is this two-way frequency table an appropriate representation of these data?

4 Construct a percentaged frequency table.

5 Use the percentaged two-way frequency table to describe the relationship between sex
CF

and intention to go to university.

6 A retailer recorded the number of ice-creams sold and the day’s maximum temperature
SF

over 8 consecutive Saturdays one summer. Use the data in the table to construct a
scatterplot of these data, and describe the features of the scatterplot.

Temperature (°C) 22 25 36 34 21 28 41 31
Number of ice-creams sold 145 155 200 198 150 179 230 180

7 a Use the data in Question 6 to determine the value of the correlation coefficient
between Temperature and Number of ice-creams sold.
b Classify the strength of this relationship

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 54 Chapter 1 ■ Investigating associations between two variables
Review

8 The scatterplot on the right 50

CF
shows the Government
expenditure on health against the 40

infant mortality
infant mortality for a group of
30
countries
a Describe the relationship in 20
this scatterplot.
b Is it appropriate to calculate 10
the correlation coefficient for
these data? 0 5 10 15
government expenditure on health

9 If the variance of X is 16, the variance of Y is 25, and the covariance of X and Y is 20
find the value of r, the correlation between X and Y.

10 If r = 0.67, sx = 3.8, and sy = 1.7, what is the covariance between X and Y?

11 Suppose that the correlation between age and scores on a hearing test are linearly
related, and that r = −0.77.
a Determine the value of the coefficient of determination, R2.
b Interpret R2 in terms of the variables age and score on the hearing test.

12 Miller conducted study to investigate the 14

CU
height of his seedlings and the average
number of hours of daily sunshine each 12
plant received over a 14-day period.
height (cm)

10
He planted his seedlings in 10 different
locations in his garden, and his results are 8
shown in the following scatterplot.
a Describe the relationship in the 6
scatterplot.
b Miller checks his data and realises 4 6 8 10 12 14
he has made a mistake is recording sunlight (hrs/day)
the data. The actual height of the
plant which received an average of 4.8 hrs/day was not the 11.5 cm he had used
in his analysis. He decides to remove this data value. How would the value of
the correlation coefficient calculated with the outlier excluded compare to that
calculated with the outlier included?

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 Chapter 1 Review 55  

Review
Extended-response questions
1 One thousand drivers who had an accident during the past year were classified

CF
according to their age and the number of accidents they had.

Number of accidents Age < 30 Age ⩾ 30

At most one accident 130 170
More than one accident 470 230
Total 600 400

a What are the variables shown in the table? Are they categorical or numerical?
b Determine the response and explanatory variables.
c How many drivers under the age of 30 had more than one accident?
d Convert the table values to percentages by calculating the column percentages.
e Use these percentages to comment on the statement: ‘Of drivers who had an
accident in the past year, younger drivers (age < 30) are more likely than older
drivers (age ⩾ 30) to have had more than one accident.’

2 The data below are the hourly pay rates (in dollars per hour) of 10 production-line
workers along with their years of experience on initial appointment.

Rate ($/h) 15.90 15.70 16.10 16.00 16.79 16.45 17.00 17.65 18.10 18.75
Experience (years) 1.25 1.50 2.00 2.00 2.75 4.00 5.00 6.00 8.00 12.00

a Construct a scatterplot of the data, with the variable rate plotted on the vertical axis
and the variable experience on the horizontal axis. Why has the vertical axis been
used for the variable rate?
b Comment on direction, outliers, form and strength of any association revealed.
c Determine the value of the correlation coefficient correct (r) to three decimal places.
d Determine the value of the coefficient of determination (R2) and interpret.

3 As part of the General Social Survey conducted in the US, respondents were asked to
say whether they found life exciting, pretty routine or dull. Their marital status was
also recorded as married, widowed, divorced, separated or never married. The results
are organised into a table as shown.

Marital status (%)

Attitude to life
Married Widowed Divorced Separated Never
Exciting 47.6 33.8 46.7 45.9 52.3
Pretty routine 48.7 54.3 47.6 44.6 44.4
Dull 3.7 11.9 5.7 9.5 3.3
Total 100.0 100.0 100.0 100.0 100.0

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 56 Chapter 1 ■ Investigating associations between two variables
Review

a What percentage of widowed people found life ‘dull’?

b What percentage of people who were never married found life ‘exciting’?
c What is the likely explanatory variable in this investigation?
d Does the information you have been given support the contention that a person’s
attitude to life is related to their marital status? Justify your argument by quoting
appropriate percentages.

4 The manager of a large manufacturing plant was worried about the quality of the
products coming from the plant. She noticed that some workers made far more mistakes
than others in assembling the gizmos and was concerned that they were trying to work
too quickly. The manager collected information from a random sample of 15 workers,
recording the time taken to assemble a gizmo and the number of mistakes made.

Time taken (mins) Number of mistakes

45 7
45 2
44 6
37 7
38 6
55 3
56 4
42 6
57 1
47 3
41 3
52 5
51 7
36 6
61 0
a Which is the explanatory variable, and which is the response variable?
b Construct a scatterplot of these data. Use the scatterplot to describe the relationship
between the time taken and the number of mistakes made.
c Is it appropriate to calculate Pearson’s r for these data? Why?
d Determine the value of Pearson’s r for these data.
e Give the coefficient of determination (R2) and interpret.

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 2
Chapter 2
Modelling associations
between variables

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 1 Bivariate data analysis

▶▶ How do we fit a linear model to data?

▶▶ How do we interpret a linear model?
▶▶ How do we check the strength of a linear model?
▶▶ How do we check if the model is appropriate for the data?
▶▶ How do we make predictions using a linear model?

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 58 Chapter 2 ■ Modelling associations between variables

Introduction
In Chapter 1, we learned how to identify and describe the relationships between two
categorical variables, using two-way percentage frequency tables, and between two
numerical variables, using scatterplots and the correlation coefficient. In this chapter, we
will extend these ideas further, beginning with fitting a line to bivariate numerical data.

2A Fitting a linear model to numerical data

Once we identify a linear association between two numerical variables, we can fit a linear
model to the data and find its equation. This equation gives us a better understanding of the
nature of the relationship between the two variables, and we can also use the model to make
predictions based on this understanding of the relationship.
The process of modelling an association with a straight line is known as linear regression
and the resulting line is often called the regression line.
The equation of a line relating two variables x and y is of the form
y = a + bx

where a and b are constants. When the equation is written in this form:

■■a represents the coordinate of the point where the line crosses the y-axis (the y-intercept)
■■b represents the slope of the line.
In order to summarise any particular (x, y) data set, numerical values for a and b are needed
that will ensure the line passes close to the data. There are several ways in which the values
of a and b can be found.
The easiest way to fit a line to bivariate data is to construct a scatterplot and draw the line
‘by eye’. We do this by placing a ruler on the scatterplot so that it seems to follow the
general trend of the data. You can then use the ruler to draw a straight line. Unfortunately,
unless the points are very tightly clustered around a straight line, the results you get by
using this method will differ a lot from person to person.
The most common approach to fitting a straight line to data is to use the least squares
method. This method assumes that the variables are linearly related, and works best when
there are no clear outliers in the data.

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 2A Fitting a linear model to numerical data 59  

▶▶Some terminology
To explain the least squares method, we need to define several terms.
The scatterplot shows five data points, (x1, y1), (x2, y2), ( x3, y3), (x4, y4) and (x5, y5).
A regression line (not necessarily the least squares line) has also been drawn on the scatterplot.
The vertical distances d1, d2, d3, d4 and d5 of each of the data points from the regression line
are also shown.
These vertical distances, d, are known as residuals.
y

(x5, y5)
d5
(x3, y3) regression line

(x2, y2) d3 d4
(x4, y4)
d2

d1
(x1, y1)
x

▶▶The least squares regression line

The least squares regression line is the line where the sum of the squares of the residuals is
as small as possible; that is, it minimises:
   the sum of the squares of the residuals = d21 + d22 + d23 + d24 + d25
Why do we minimise the sum of the squares of the residuals and not the sum of the
residuals? This is because the sum of the residuals for the least squares regression line is
always zero. Some residuals are positive and some negative, and in the end they add to zero.
Squaring the residuals solves this problem.

The least squares regression line

The least squares regression line is the line that minimises the sum of the squares of the
residuals.

The assumptions for fitting a least squares regression line to data are the same as for using
the correlation coefficient, r. These are that:

■■the data are numerical

■■the association is linear
■■there are no clear outliers.

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 60 Chapter 2 ■ Modelling associations between variables

▶▶How do we determine the equation of the least squares

regression line?
To determine exactly the equation of the least squares regression line we need to determine
the values of the intercept (a) and the slope (b) that define the line. Calculus can be used to
give us rules for these values:

The equation of the least squares regression line

The equation of the least squares regression line is given by y = a + bx, where:
rsy
the slope (b) is given by b =
sx
and
the intercept (a) is then given by a = y − bx
Here:

■■ r is the correlation coefficient

■■ sx and sy are the standard deviations of x and y
■■ x and y are the mean values of x and y.

Warning
If you do not correctly decide which is the explanatory variable (the x-variable) and
which is the response variable (the y-variable) before you start calculating the equation
of the least squares regression line, you may get the wrong answer.

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 2A Fitting a linear model to numerical data 61  

Example 1 Determining the equation of the least squares regression line using
the formula

The height (x) and weight (y) of 11 people have been recorded, and the values of the
following statistics determined:
x = 173.3 cm sx = 7.444 cm y = 65.45 cm sy = 7.594 cm and r = 0.8502
Use the formula to determine the equation of the least squares regression line that enables
weight to be predicted from height. Calculate the value of the slope and intercept correct
to two ­significant figures.
Solution
1 Identify and write down the EV: height (x)
explanatory variable (EV) and the RV: weight (y)
response variable (RV). Label as
x and y, respectively.
Note: In saying that we want to predict
weight from height, we are implying that
height is the EV.
2 Write down the given information. x = 173.3 sx = 7.444
y = 65.45 sy = 7.594
r = 0.8502
3 Calculate the slope. Slope:
rsy 0.8502 × 7.594
b= =
sx 7.444
= 0.87 (correct to two significant figures)
4 Calculate the intercept. Intercept:
a = y − bx
= 65.45 − 0.87 × 173.3
= −85 (correct to two significant figures)
5 Use the values of the intercept and y = −85 + 0.87x
the slope to write down the least or
squares regression line using the weight = −85 + 0.87 × height
variable names.

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 62 Chapter 2 ■ Modelling associations between variables

Calculator activity 2A Determining the equation of the least squares regression

line using a scientific calculator

x 150 157 159 160 161 161 165 170 170 173
y 158 160 162 157 160 162 166 170 167 176

x 177 177 178 184 188 188 188 188 194 200
y 173 176 178 180 189 187 181 192 193 186

Casio fx82
Change the mode to statistics with two random variables.
Press > 2 > 2 and you should get a table like this:

x y
1
2
3

Insert the first data by pressing 150 then =. Continue inserting the data similarly for the
x variables.
Use the arrow keys (on the blue circular button near the screen) to navigate to the y
column and insert the y data points similarly, ensuring that each observation aligns
correctly.
Leave table by pressing

Press > 1 [STAT] > 5 [Reg] > 1 [a] > = to get the intercept.

a
32.97194808

Press > 1 [STAT] > 5 [Reg] > 2 [b] > = to get the slope.

b
0.806640206

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 2A Fitting a linear model to numerical data 63  

TI-30XB
Press to move to a table.
Insert the first data by pressing 1 then and continue inserting the rest of the x data.
Move to the second column by pressing and then put in the y data, ensuring that they
match up with their respective x data. When finished, press clear to exit the table.
Press > [stat] > 2 > · · · and then use the arrow keys on the top right
circular button to navigate to the intercept b, then press · ·. Repeat the steps again
but this time navigate to the slope a, then press · ·. You should get:

b 32.97194808
a 0.806640206

Note that the TI-30XB labels the intercept and slope differently.

Sharp
Enter statistics mode for (x, y) observations by pressing 11
Insert the first (x, y) observation by pressing 150 > [(x, y)] > 158 > [DATA]
and continue following the same process for the other observations.
Press > [a] > = to get the intercept a:

a=
32.97194808

Press > [b] > = to get the slope b:

b=
0.806640206

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 64 Chapter 2 ■ Modelling associations between variables

Example 2 Determining the equation of the least squares regression line using
Excel

Use Excel to fit a least squares regression line to the data relating height (RV) to arm
span (EV) for the group of 20 adults given in Chapter 1, Example 9. Give your answers
­correct to two decimal places.

Solution
1 First ensure that the Analysis ToolPakSelect is installed, then select the Data Analysis
­command button on the Data tab. When Excel displays the Data Analysis dialog box,
select the Regression tool from the Analysis Tools list and then click OK.
2 Place the cursor on the Input X Range dialogue box, and then select the values of
arm span. Next, place the cursor on the Input Y Range dialogue box, and then select
the values of height.

3 Select OK to generate the following output.

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 2A 2A Fitting a linear model to numerical data 65  

4 The intercept and slope are given in the bottom table of the output. Thus:
■■
intercept a = 32.97195 = 32.97 to two decimal places
■■
slope b = 0.80664 = 0.81 to two decimal places.
Note also that the value of the coefficient of determination R2 is also given in the
output, here R2 = 0.903769 = 90.4%.
Note also that the least squares regression line can be added to the scatterplot by
selecting the scatterplot, choosing Add Chart Element from the menu ribbon and then
choosing Trendline.
5 The equation of the least squares regression line is:
height = 32.97 + 0.81 × arm span

Exercise 2A
1 What is a residual?

SF
2 The least squares regression line is obtained by:
A minimising the residuals
B minimising the sum of the residuals
C minimising the sum of the squares of the residuals
D minimising the square of the sum of the residuals
E maximising the sum of the squares of the residuals

3 Write down the three assumptions we make about the association we are modelling
when we fit a least squares regression line to bivariate data.

Skillsheet Using a formula to determine the equation of a least squares

regression line
Example 1 4 We wish to find the equation of the least squares regression line that enables the CF

pollution level beside a freeway to be predicted from traffic volume.

a Which is the response variable (RV) and which is the explanatory variable (EV)?
b Use the formula to determine the equation of the least squares regression line that
enables the pollution level (y) to be predicted from the traffic volume (x), where:
r = 0.940 x = 11.4 sx = 1.87
y = 231 sy = 97.9
Write the equation in terms of pollution level and traffic volume with the
y-intercept and slope written correct to two significant figures.

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 66 Chapter 2 ■ Modelling associations between variables 2A

5 We wish to find the equation of the least squares regression line that enables life
expectancy in a country to be predicted from birth rate.
a Which is the response variable (RV) and which is the explanatory variable (EV)?
b Use the formula to determine the equation of the least squares regression line that
enables life expectancy (y) to be predicted from birth rate (x), where:
r = −0.810 x = 34.8 sx = 5.41 y = 55.1 sy = 9.99
Write the equation in terms of life expectancy and birth rate with the y-intercept
and slope written correct to two significant figures.
6 We wish to find the equation of the least squares regression line that enables the
distance travelled by a car (in 1000s of km) to be predicted from its age (in years).
a Which is the response variable (RV) and which is the explanatory variable (EV)?
b Use the formula to determine the equation of the least squares regression line that
enables distance travelled (y) by a car to be predicted from its age (x), where:
r = 0.947 x = 5.63 sx = 3.64 y = 78.0 sy = 42.6

Write the equation in terms of distance travelled and age with the y-intercept and
slope written correct to two significant figures.
7 The following questions relate to the formulas used to calculate the slope and

CU
intercept of the least squares regression line.
a A least squares regression line is calculated and the slope is found to be negative.
What does this tell us about the sign of the correlation coefficient?
b The correlation coefficient is zero. What does this tell us about the slope of the
least squares regression line?
c The correlation coefficient is zero. What does this tell us about the intercept of the
least squares regression line?
8 The table shows the number of sit-ups and push-ups performed by six students.

Sit-ups (x) 52 15 22 42 34 37 CF

Push-ups (y) 37 26 23 51 31 45

Let the number of sit-ups be the explanatory (x) variable. Use your calculator to show
that the equation of the least squares regression line is:
push-ups = 16.5 + 0.566 × sit-ups (correct to three significant figures)

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 2A 2A Fitting a linear model to numerical data 67  

9 The table shows average hours worked and university participation rates (%) in six
countries.

Hours 35.0 43.0 38.2 39.8 35.6 34.8

Rate 26 20 36 25 37 55

Use your calculator to show that the equation of the least squares regression line that
enables participation rates to be predicted from hours worked is:
rate = 130 − 2.6 × hours (correct to two significant figures)

10 The table shows the number of runs scored and balls faced by batsmen in a cricket
match.

Runs (y) 27 8 21 47 3 15 13 2 15 10 2
Balls
29 16 19 62 13 40 16 9 28 26 6
faced (x)

a Use your calculator to show that the equation of the least squares regression line
enabling runs scored to be predicted from balls faced is:
y = −2.6 + 0.73x
b Rewrite the regression equation in terms of the variables involved.

11 The table below shows the number of TVs and cars owned (per 1000 people) in six
countries.

Number of TVs (y) 378 404 471 354 381 624

Number of cars (x) 417 286 435 370 357 550

We wish to predict the number of TVs from the number of cars.

a Which is the response variable?
b Show that, in terms of x and y, the equation of the least squares regression line is:
y = 61.2 + 0.930x (correct to three significant figures)
c Rewrite the regression equation in terms of the variables involved.

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 68 Chapter 2 ■ Modelling associations between variables

2B Using the least squares regression line to model a

relationship between two numerical variables
So far all of our analysis has been based on the assumption that the relationship between
the two variables of interest is linear. This is why it has been essential to examine the
scatterplot before proceeding with any further analyses. However, sometimes the scatterplot
is not sensitive enough to reveal the non-linear structure of a relationship. To gain more
information we need to investigate the fit of the regression line to the data, and we do this
using a residual plot.

▶▶The residual plot – assessing the appropriateness of fitting a

linear model to data
Residuals are defined as the vertical distances between the regression line and the actual
data value.

Residual plot
A residual plot is a graph of the residuals (plotted on the vertical axis) against the
explanatory variable (plotted on the horizontal axis), where:
Residual value = actual data value − predicted data value

Residuals can be positive, negative or zero:

■■Data points above the fitted regression line have a positive residual
■■Data points below the fitted regression line have a negative residual
■■Data points on the fitted regression line have zero residual.
Suppose, for example, that we wish to investigate the nature of the association between the
price of a secondhand car and its age. The ultimate aim is to find a mathematical model that
will enable the price of a secondhand car to be predicted from its age.
To this end, the age (in years) and price (in dollars) of a selection of secondhand cars of the
same brand and model have been collected and are recorded in a table overpage.

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 2B Using the least squares regression line to model a relationship 69  

Age (years) Price (dollars) Age (years) Price (dollars)

1 32 500 4 19 200
1 30 500 5 16 000
2 25 600 5 18 400
3 20 000 6 6 500
3 24 300 7 6 400
3 22 000 7 8 500
4 22 000 8 4 200
4 23 000

The equation of the least squares regression line from these data is:
price = 35 100 − 3940 × age
To determine the appropriateness of fitting the least squares regression line to these data we
will construct a residual plot. But first, we need to calculate the residual for each value of
the explanatory variable, in this case age.

Example 3 Calculating a residual

The actual price of the 6-year-old car is $6500. Calculate the residual when its price is
predicted using the regression equation: price = 35 100 − 3940 × age
Solution
1 Write down the actual price. Actual price: $6500
2 Determine the predicted price using Predicted price = 35 100 − 3940 × 6
the least squares regression equation: = $11 460
price = 35 100 − 3940 × age
3 Determine the residual. Residual = actual − predicted
= $6500 − $11 460
= −$4960

By completing this calculation for all data points, 4000

we can construct a residual plot. Because the mean 2000
Residual

of the residuals is always zero, we will construct 0

the horizontal axis for the plot at zero (indicated −2000
by the red line) as shown. −4000
−6000
0 1 2 3 4 5 6 7 8 9
Age (years)

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 70 Chapter 2 ■ Modelling associations between variables

Example 4 Using Excel to construct a residual plot

Construct a residual plot for the least squares regression line fitted to the data in
­Example 2.

Solution
1 When setting up a spreadsheet to carry out the linear regression, check the boxes
Residuals and Residual Plots.
Spreadsheet

2 Select OK. In addition to the regression output columns containing the predicted
­values of the RV (in this case height), the associated residuals will be produced,
together with the associated residual plot.

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 2B Using the least squares regression line to model a relationship 71  

▶▶What are we looking for in a residual plot?

The scatterplot below shows a relationship that is clearly linear. When a line is fitted to the
data, the resultant residual plot appears to be a random collection of points roughly spread
around zero.
6 1
5
y=6–x .5
4

Residual
Y3
0
2 X
1 −.5
0
0 1 2 3 4 5 6    −1
X 0 1 2 3 4 5 6
Scatterplot with regression line Residual plot

By contrast, the relationship shown in the following scatterplot is clearly non-linear. Fitting
a straight line to the data results in the residual plot shown. While there is some random
behaviour, there is also a clearly identifiable curve shown in the scatterplot.
5 1

4 .5
Residual

3
Y 0
2 X
−.5
1

0 −1
0 1 2 3 4 5 6 7 8 9 10    0 2 4 6 8 10
X
Scatterplot displaying a Residual plot
non-linear relationship ­fitted
with a regression line

In summary, if a residual plot shows evidence of some sort of systematic behaviour

(a pattern), then it is likely that the underlying relationship is non-linear. However, if the
residual plot appears to be a random collection of points roughly spread around zero, then
we can be happy that our original assumption of linearity was reasonable and that we have
appropriately modelled the data.

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 72 Chapter 2 ■ Modelling associations between variables

Example 5 Interpreting a residual plot

Which of the following residual plots would call into question the assumption of linearity
in a regression analysis? Give reasons for your answers.

1    1

.5 .5
Residual

Residual
0 0
X X
−.5 −.5

−1 −1
0 2 4 6 8 10 0 2 4 6 8 10
A B

1    1

.5 .5
Residual
Residual

0 0
X X
−.5 −.5

−1 −1
0 2 4 6 8 10 0 2 4 6 8 10
C D

Solution
Examine each plot, Plot A – residuals look random, so linearity assumption is met.
looking for a pattern Plot B – there is a clear curve in the residuals, the linearity assumption
or structure in the is not met.
residual.
Plot C – residuals look random, so linearity assumption is met.
Plot B – there is a clear curve in the residuals, the linearity assumption
is not met.

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 2B Using the least squares regression line to model a relationship 73  

▶▶Interpreting the slope and intercept of a regression line

Interpreting the slope and intercept of a regression line
For the regression line y = a + bx:

■■ the slope (b) estimates the average change (increase/decrease) in the response
variable (y) for each one-unit increase in the explanatory variable (x)
■■ the intercept (a) estimates the average value of the response variable (y) when the
explanatory variable (x) equals 0.

Consider again the least squares regression line relating the age of a car to its price:
price = 35 100 − 3940 × age
The two key values in this mathematical model are the intercept (35 100) and the slope
(−3940). The interpretation of these values is discussed in the following example.

Example 6 Interpreting the slope and intercept of a regression line

The equation of a regression line that 45000
enables the price of a secondhand car 40000
to be ­predicted from its age is: 35000
Price (dollars)

30000
price = 35 100 − 3940 × age
25000
a Interpret the slope in terms of the 20000
­variables price and age. 15000
b Interpret the intercept in terms of the 10000
5000
variables price and age.
0
0 1 2 3 4 5 6 7 8 9 10
Age (years)

Solution
a The slope predicts the average change On average, the price of these cars decreases by
(increase/decrease) in the price for each $3940 each year.
one-year increase in the age. Because the
slope is negative, it will be a decrease.

b The intercept predicts the value of the On average, the price of these cars when new
price of the car when age equals 0; that was $35 100.
is, when the car was new.

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 74 Chapter 2 ■ Modelling associations between variables

▶▶Using the coefficient of determination (R2) to assess the strength

of a ­linear association in terms of the explained variation
In the last chapter, we defined the coefficient of determination R2 as the percentage
of variation in the response variable, which can be explained by the variation in the
explanatory variable. It is an assessment of the strength of the linear association, and it can
be used to assess the relative importance of associations.
Returning to our example of the association between the price of a secondhand car and its
age, here r = −0.964 and thus:
coefficient of determination, R2 = (−0.964) 2 = 0.930 or 93%
From this was can say that 93% of the variation in the price of secondhand cars can be
explained by the variation in the age of the cars, which makes the age of the car very
important in predicting its value. In fact, we often find that there are several explanatory
variables that may help explain the value of the response variable, and we can use the value
of the coefficient of determination to determine their relative importance.

Example 7 Assessing the strength of the linear association

A recent study in a certain town found the correlation between a father’s education
level and their child’s education level to be 0.4, whereas the correlation between a
mother’s education level and that of their child was 0.3. Which of these variables has a
stronger relationship with a child’s education level, father’s education level or ­mother’s
education level? Explain your answer.
Solution
1 To compare the relative R2father, child = (0.4) 2 = 0.16 = 16%
importance of these variables we R2mother, child = (0.3) 2 = 0.09 = 9%
need to calculate the coefficient
of determination for each.
2 Interpret and compare in terms of The father’s education level is the more ­important ­
the variables in the study. explanatory variable, explaining nearly twice the
­variation in education level as the mother’s
education level.

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 2B Using the least squares regression line to model a relationship 75  

▶▶Using the equation of a regression line to make predictions

Once the equation of the regression line is known, we can use it to make predictions, as
shown in the following example.

Example 8 Using the equation of a regression line to make predictions

The relationship between eyesight test score and age, based on a sample of adults aged
from 20 to 60 years old, was found to be:
eyesight test score = 4.65 − 0.0387 × age
Use the equation to predict (to two decimal places) the eyesight test score for:
a a person aged 40
b a person aged 65

Solution
a Substitute in the formula and evaluate. Person aged 40
eyesight test score
= 4.65 − 0.0387 × 40 = 3.10
b Substitute in the formula and evaluate. Person aged 65
eyesight test score
= 4.65 − 0.0387 × 65 = 2.13

▶▶Interpolation and extrapolation

When using a regression line to make predictions, we must be aware that, strictly speaking, the
equation we have found applies only to the range of data values used to derive the equation.

Predicting within the range of data is called interpolation.

In general, we can expect a reasonably reliable result when interpolating.

Predicting outside the range of data is called extrapolation.

With extrapolation we have no way of knowing if the assocation between the two variables
continues to be linear outside the data range, and thus we cannot be sure of the reliability of
our prediction.
In Example 8, the data used to determine the regression equation included adults aged from
20 to 60 years old. Using this equation to predict the eyesight test score for a person aged
40 is interpolation, as 40 is within the age range used to derive the equation. On the other
hand, the prediction for the person aged 65 years is extrapolation, as that person is outside
the age range used.

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 76 Chapter 2 ■ Modelling associations between variables

Consider again the relationship between the price and the age of the secondhand car. This
equation was determined based on data obtained from the price of cars aged from 1 to 8
years old.
Using the regression line to predict the price of a 10-year old car, would give:

price = 35 100 − 3940 × 10 = –4300

Clearly we do not really expect the car to be worth a negative amount! This is an example
of extrapolation, and highlights the dangers of predicting too far outside the data range.
Clearly the assumption of linearity no longer holds here.

▶▶Reporting the results

After the regression analysis has been carried out, a report can be written about the findings.
Here is an example of a report that could be written to summarise the association between
the price and age of secondhand cars.

Report
To investigate the association between the price and age of secondhand cars data were collected from
a sample of 15 cars. The scatterplot showed a strong, negative, linear relationship between the price
and age of secondhand cars (r = −0.964), indicating that older cars tend to be lower in price. There
were no obvious outliers, and the lack of a clear pattern in the residual plot confirmed the linearity
assumption.
The equation of the least squares regression line is:
price = 35 100 − 3940 × age
The intercept predicts that, on average, the price of the cars when new was $35 100.
The slope predicts that, on average, the price of the cars decreases by $3940 each year.
The coeffcient of determination indicates that 93% of the variation in the price of these secondhand
cars is explained by the variation in their age.

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 2B Using the least squares regression line to model a relationship 77  

Performing a regression analysis

To summarise, performing a regression analysis involves several processes, which
include:

■■ constructing a scatterplot to investigate the nature of an association

■■ calculating the correlation coefficient to indicate the strength of the relationship
■■ determining the equation of the regression line
■■ interpreting the coefficients of the y-intercept (a) and the slope (b) of the least squares
regression line y = a + bx
■■ using the coefficient of determination to indicate the predictive power of the
association
■■ using the regression line to make predictions
■■ calculating residuals and using a residual plot to test the assumption of linearity
■■ writing a report on your findings.

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 78 Chapter 2 ■ Modelling associations between variables 2B

Exercise 2B
Skillsheet Some basics
1 Use the line on the scatterplot on the right to 100

CF
determine the equation of the least squares regression
80
line in terms of the variables, mark and days absent.

Mark (%)
Give the intercept correct to the nearest whole 60
number and the slope correct to one decimal place.
40

20

0
0 1 2 3 4 5 6 7 8
Days absent
Interpreting residual plots
Example 5 2 Each of the following residual plots has been constructed after a least squares
regression line has been fitted to a scatterplot. Which of the residual plots suggest that
the use of a linear model to fit the data was inappropriate? Why?
A B
4.5 3.0
3.0 1.5
Residual

Residual

1.5 0.0
0.5 −1.5
−1.5 −3.0
0 2 4 6 8 10 12 14 0 2 4 6 8 10 12
C
3
Residual

−3

0 2 4 6 8 10 12 14

Reading a regression equation, making predictions and calculating

residuals
Example 3,6,8 3 The equation of a regression line that enables hand span to be predicted from height is:
hand span = 2.9 + 0.33 × height
Complete the following sentences, by filling in the boxes:
a The explanatory variable is .
b The slope is and the intercept is .
c A person is 160 cm tall. The regression line predicts a hand span of cm.
d This person has an actual hand span of 58.5 cm.
The error of prediction (residual value) is cm.
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 2B 2B Using the least squares regression line to model a relationship 79  

4 For a 100 km trip, the equation of a regression line that enables the fuel consumption
of a car (in litres) to be predicted from its weight (kg) is:
fuel consumption = −0.1 + 0.01 × weight
Complete the following sentences:
a The response variable is .
b The slope is and the intercept is .
c A car weighs 980 kg. The regression line predicts a fuel consumption of
litres.
d This car has an actual fuel consumption of 8.9 litres.
The error of prediction (residual value) is litres.

Interpreting a regression equation and its coefficient of determination

Example 7 5 In an investigation of the relationship between the energy content (in calories) and the
fat content (in g) in a standard-sized packet of chips, the least squares regression line
was found to be:
energy content = 27.8 + 14.7 × fat content with R2 = 0.7569
Use this information to complete the following sentences.
a The slope is and the intercept is .
b The regression equation predicts that the energy content in a packet of chips
increases by calories for each additional gram of fat it contains.
c r=
d % of the variation in energy content of a packet of chips can be explained
by the variation in their .
e The fat content of a standard-sized packet of chips is 8 g.
i The regression equation predicts its energy content to be calories.
ii The actual energy content of this packet of chips is 132 calories.
The error of prediction (residual value) is calories.

6 In an investigation of the relationship between the success rate (%) of sinking a putt
and the distance of amateur golfers from the hole (in cm), the least squares regression
line was found to be:
success rate = 98.5 − 0.278 × distance with R2 = 0.497
a Write down the slope of this regression equation and interpret the meaning of this
slope.
b Use the equation to predict the success rate when a golfer is 90 cm from the hole.
c At what distance (in metres) from the hole does the regression equation predict an
amateur golfer to have a 0% success rate of sinking the putt?
d Calculate the value of r, correct to three decimal places.
e Write down the value of the coefficient of determination as a percentage and give
an interpretation of the result.

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 80 Chapter 2 ■ Modelling associations between variables 2B

Performing a regression analysis including the use of residual plots

7 The scatterplot opposite shows the pay 14
rate (dollars per hour) paid by a company 13
12
to workers with different years of work

Pay rate ($)

11
experience. Using a calculator, show that the 10
least squares regression line has the equation: 9
8
y = 8.56 + 0.289x with r = 0.967 7
6
5
0 2 4 6 8 10 12
Experience (years)
a Is it appropriate to fit a least squares
regression line to the data? Why?
b Work out the coefficient of determination.
c What percentage of the variation in a person’s pay rate can be explained by the
variation in their work experience?
d Write down the equation of the least squares regression line in terms of the
variables pay rate and years of experience.
e Interpret the y-intercept in terms of the variables pay rate and years of experience.
f Interpret the slope in terms of the variables pay rate and years of experience.
g Use the least squares regression equation to:
i predict the hourly wage of a person with 8 years of experience
ii determine the residual value if the person’s actual hourly wage is $11.20 per hour.
h The residual plot for this regression analysis
is shown opposite. Does the residual plot
Residual

support the initial assumption that the

relationship between pay rate and years of
experience is linear?
Explain your answer.
Experience (years)

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 2B 2B Using the least squares regression line to model a relationship 81  

8 The scatterplot opposite shows scores on a 5

hearing test against age. In analysing the data, a

Hearing test score

statistician produced the following statistics: 4
■■ coefficient of determination: R2 = 0.370
■■ least squares regression line: 3
y = 4.9 − 0.043x
2

0
25 30 35 40 45 50 55 60
Age (years)

a Determine the value of Pearson’s correlation coefficient, r, for the data.

b Interpret the coefficient of determination in terms of the variables hearing test
score and age.
c Write down the equation of the least squares line in terms of the variables hearing
test score and age.
d Write down the slope and interpret.
e Use the least squares regression equation to:
i predict the hearing test score of a person who is 20 years old
ii determine the residual value if the person’s actual hearing test score is 2.0.
f Use the graph to estimate the value of the residual for the person aged:
i 35 years
ii 55 years
g The residual plot for this regression analysis is 0.5
Residual

shown opposite. 0.0

Does the residual plot support the initial −0.5
assumption that the relationship between
−1.2
hearing test score and age is essentially linear?
0 2 4 6 8 10 12
Explain your answer. Age

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 82 Chapter 2 ■ Modelling associations between variables 2B

9 The following information was generated using Excel to investigate the relationship
between the arm span (cm) and height (cm) for a group of 20 adults.

a Is it appropriate to fit a least squares regression line to the data? Explain.

b Is the interpretation of the y-intercept meaningful? Explain.
c Use this information to complete the following report.

Report
From the scatterplot, we can see that there is a strong, , relationship between
height and arm span: r = . There are no obvious outliers. The equation of the least
squares regression line is:
height = + × arm span
The slope of the regression line predicts an increase/decrease of cm in height for each
1 cm increase in .
The coefficient of determination indicates that for this sample % of the variation in
is explained by the variation in .

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 2B 2B Using the least squares regression line to model a relationship 83  

10 In a study of the relationship between height and weight for females, the following
data were collected.
Subject Height (cm) Weight (kg)
1 169 55
2 155 54
3 175 64
4 168 56
5 170 59
6 168 60
7 160 47
8 153 45
9 166 60
10 165 52
11 160 49
12 183 63
13 170 57
14 173 56
15 154 48

a Use Excel to construct a scatterplot, calculate the value of the correlation

coefficient, find the equation of the least squares regression line, construct a
residual plot, and find the value of the coefficient of determination (use height as
the explanatory variable and weight as the response variable).
b Use these analyses to construct a report, using the structure of the report from
Question 9 as a guide.

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 84 Chapter 2 ■ Modelling associations between variables

2C Association and causation

Recently there has been interest in the strong association between the number of Nobel
prizes a country has won and the number of IKEA stores in that country(r = 0.82). This
strong association is evident in the scatterplot below. Here country flags are used to
represent the data points.

35

30
10 Million Population

25
Nobel Laureates per

20

15

10

5 r = 0.82

0 5 10 15 20
IKEA Stores per 10 Million Population

Does this mean that one way to increase the number of Australian Nobel prize winners is to
build more IKEA stores?
Almost certainly not, but this association highlights the problem of assuming that a strong
correlation between two variables indicates the association between them is causal.

Correlation does not imply causality

A correlation tells you about the strength of the association between the variables, but no
more. It tells you nothing about the source or cause of the association.

WWW ▶▶Video
To help you with this concept you should source and watch the video ‘The Question of
Causation’. It is well worth 15 minutes of your time.

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 2C Association and causation 85  

▶▶Establishing causality
To establish causality, you need to conduct an experiment. In an experiment, the value of
the explanatory variable is deliberately manipulated, while all other possible explanatory
variables are kept constant or controlled. A simplified version of an experiment is displayed
below.
Treatment 1:
Group 1 Lesson on time
series

Randomly allocate
a group of students Give test on
to two groups time series

Treatment 2:
Group 2 Lesson on
Shakespeare

In this experiment, a class of students is randomly allocated into two groups. Random
allocation ensures that both groups are as similar as possible.
Next, group 1 is given a lesson on time series (treatment 1), while group 2 is given a lesson
on Shakespeare (treatment 2). Both lessons are given under the same classroom conditions.
When both groups are given a test on time series the next day, group 1 does better than
group 2.
We then conclude that this was because the students in group 1 were given a lesson on time
series.

Is this conclusion justified?

In this experiment, the students’ test score is the response variable and the type of lesson
they were given is the explanatory variable. We randomly allocated the students to each
group while ensuring that all other possible explanatory variables were controlled by
giving the lessons under the same classroom conditions. In these circumstances, the
observed difference in the response variable (test score) can reasonably be attributed to the
explanatory variable (lesson type).
Unfortunately, it is extremely difficult to conduct properly controlled experiments,
particularly when the people involved are going about their everyday lives.
When data are collected through observation rather than experimentation, we must accept
that strong association between two variables is insufficient evidence by itself to conclude
that an observed change in the response variable has been caused by an observed change
in the explanatory variable. It may be, but unless all of the relevant variables are under our
control, there will always be alternative non-causal explanations to which we can appeal.
We will now consider the various ways this might occur.

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 86 Chapter 2 ■ Modelling associations between variables

▶▶Possible non-causal explanations for an association

Common response
Consider the following. There is a strong positive association between the number of people
using sunscreen and the number of people fainting. Does this mean that applying sunscreen
causes people to faint?
Almost certainly not. On hot and sunny days, more people apply sunscreen and more people
faint due to heat exhaustion. The two variables are associated because they are both strongly
associated with a common third variable, temperature. This phenomenon is called a
common response. See the diagram below.

causes Sunscreen

Temperature observed
association

causes Fainting

Unfortunately, being able to attribute an association to a single third variable is the

exception rather than the rule. More often than not, the situation is more complex.

Confounding variables
Statistics show that crime rates and unemployment rates in a city are strongly correlated. Can
you then conclude that a decrease in unemployment will lead to a decrease in crime rates?
It might, but other possible causal explanations could be found. For example, these data
were collected during an economic downturn. Perhaps the state of the economy caused the
problem. See the diagram below.

Unemployment

causes ? observed
Economy association
causes ?
Crime

In this situation, we have at least two possible causal explanations for the observed
association, but we have no way of disentangling their separate effects. When this happens,
the effects of the two possible explanatory variables are said to be confounded, because we
have no way of knowing which is the actual cause of the association.

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 2C 2C Association and causation 87  

Coincidence
It turns out that there is a strong correlation (r = 0.99) between the consumption of
margarine and the divorce rate in the American state of Maine. Can we conclude that eating
margarine causes people in Maine to divorce?
A better explanation is that this association is purely coincidental.
Occasionally, it is almost impossible to identify any feasible confounding variables to
explain a particular association. In these cases we often conclude that the association is
‘spurious’ and it has just happened by chance. We call this coincidence.

Conclusion
However suggestive a strong association may be, this alone does not provide sufficient
evidence for you to conclude that two variables are causally related. Unless the association
is totally spurious and devoid of meaning, it will always be possible to find at least one
variable ‘lurking’ in the background that could explain the association.

Association (correlation) and causation

By itself, an observed association between two variables is never enough to justify the
conclusion that two variables are causally related, no matter how obvious the causal
explanation may appear to be.

Exercise 2C
1 A study of primary school children aged 5 to 11 years finds a strong positive

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correlation between height and score on a test of mathematics ability. Does this mean
that taller people are better at mathematics? What common cause might counter this
conclusion?

2 There is a clear positive correlation between the number of churches in a town and
the amount of alcohol consumed by its inhabitants. Does this mean that religion is
encouraging people to drink? What common cause might counter this conclusion?

3 There is a strong positive correlation between the total amount of ice cream consumed
and the number of drownings each day. Does this mean that eating ice cream at the
beach is dangerous? What common cause might explain this association?

4 The number of days a patient stays in hospital is positively correlated with the number
of beds in the hospital. Can it be said that bigger hospitals encourage patients to stay
longer than necessary just to keep their beds occupied? What common cause might
counter this conclusion?

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 88 Chapter 2 ■ Modelling associations between variables

2D Conducting an investigation – solving practical problems

In Year 11 General Mathematics we introduced the Statistical Investigation Process, and the
steps involved in undertaking this process:
1 Pose the question – decide what data would allow you to address the problem
2 Data – collect or obtain the data
3 Analyse – summarise and display the data to answer the question posed
4 Conclusion – interpret the results and communicate what has been learned.

1 2
Pose the Collect
question the data

Problem Data

4 3
Interpret Analyse
the results the data

In Year 11 we applied these steps to practical questions such as:

■■the hours that Year 11 students spent on social media in 2014 compared to 2012
■■the age of mothers and fathers when their first child was born in 1970, 1990 and 2010.
The questions involved investigation of the association between a categorical and a
numerical variable, and they used the techniques of analysis appropriate for these variables.
We now have the tools to extend our investigations to questions concerning two categorical
variables and two numerical variables.

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 2D Conducting an investigation – solving practical problems 89  

The following table summarises the data analysis tools we now know and can use in an
investigation.

One categorical and one Back-to-back stemplots

numerical variable Boxplots
Median, Interquartile range
Mean, Standard deviation
Two categorical variables Two-way frequency table
Column percentages
Stacked bar chart
Two numerical variables Scatterplot
Correlation coefficient
Least squares regression line (intercept and slope)
Residual plot
Coefficient of determination

Example 9 Identifying, analysing and describing the association between two

categorical variables

Does money make us happy? Investigate this relationship. Are your findings the same for
males and females?
Solution
One commonly used measure that we could use to measure the amount of money that
­people have is socioeconomic status (SES). For a measure of happiness, we could ask
respondents if they were satisfied with their life overall (yes, no). Thus, we can pose the
question: ‘Is there a relationship between socioeconomic status and satisfaction with life
overall?’
Using a data set that recorded each respondent’s socioeconomic status (low, mid, high)
and answered the question ‘Are you satisfied with your life overall?’ (yes, no), the
following analyses were carried out.
Firstly, the following two-way percentage frequency table summarises the responses
observed in the sample of 500 people.

Socioeconomic status (SES)

Are you satisified with your life overall? Low SES Mid SES High SES
Yes 84.6% 90.2% 79.5%
No 15.4%   9.8% 20.5%
Total 100.0% 100.0% 100.0%

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 90 Chapter 2 ■ Modelling associations between variables

The following two-way percentage frequency table summarises the responses for the
females (n = 250) in the sample.

Socioeconomic status (SES)

Are you satisified with your life overall? Low SES Mid SES High SES
Yes 83.9% 85.2% 84.0%
No 16.1% 14.8% 16.0%
Total 100.0% 100.0% 100.0%
The following two-way percentage frequency table summarises the responses for the
males (n = 250) in the sample.

Socioeconomic status (SES)

Are you satisified with your life overall? Low SES Mid SES High SES
Yes 85.2% 95.2% 74.6%
No 14.8%   4.8% 25.4%
Total 100.0% 100.0% 100.0%

Using these analyses, we are now in a position to answer the question.

Report
A study was conducted to investigate the relationship between socioeconomic status and satisfaction
with life overall. We were particularly interested to know if those of High SES were more likely to be
satisfied with their lives. Data were collected from a sample of 500 people, 250 males and
250 females. When the total group was examined, it appeared that there was a relationship between
SES and satisfaction with life overall, but contrary to expectations it was the Mid SES group who
were more likely to be satisfied (90.2%), followed by the Low SES group (84.6%) and then the
High SES group, who were the least likely to be satisfied with their life overall (79.5%).
However, further examination showed that this relationship did not hold for both males and females
when each sex was examined separately. For the females, there was no relationship between SES
and satisfaction with life, with each group showing similar percentages who were satisfied (Low
SES: 83.9%, Mid SES: 85.2%, High SES: 84.0%). However, there was a clear relationship for males,
with the Mid SES group more likely to be satisfied (95.2%), followed by the low SES group (85.2%)
and then the High SES group, who were the least likely to be satisfied with their life overall (74.6%).

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 2D Conducting an investigation – solving practical problems 91  

Example 10 Identifying, analysing and describing the association between two

numerical variables

Which of our body measurements is the best predictor of height?

Solution
Let’s look at two body measurements that are easy to collect: head circumference and
arm length. Then we can pose the question: ‘Which is the better predictor of height, head
circumference or arm length?’
The following data were collected from a group of 20 students (all measurements are in cm):
Subject Height Arm length Head circumference
1 179.3 74.2 57.1
2 170.4 68.5 57.3
3 159.0 66.0 55.5
4 172.5 74.8 60.4
5 162.0 68.7 56.8
6 167.1 68.3 54.8
7 159.4 66.6 55.9
8 167.3 69.3 57.7
9 167.7 71.2 56.2
10 184.3 77.0 60.0
11 177.7 73.5 57.5
12 169.9 76.3 56.3
13 154.9 64.4 56.0
14 156.5 68.2 57.1
15 158.0 67.8 57.5
16 165.0 70.0 58.5
17 166.6 77.2 60.0
18 183.7 79.4 59.8
19 183.3 75.9 57.3
20 180.2 78.9 57.5

Using the data, the following analyses were able to be produced.

Arm length Residual Plot r = 0.8461
10
R2 = 71.6%
5
a = 44.09
Residuals

0
50 60 70 80 90 b = 1.742
−5

−10

−15

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 92 Chapter 2 ■ Modelling associations between variables

20 Head circumference Residual Plot r = 0.4796

10
R2 = 23.0%
a = 2.97

Residuals
0
54 56 58 60 62 b = 2.894
−10

−20

Based on these analyses the following report could be written to answer the question.

Report
A study was conducted to investigate which measure was a better predictor of a person’s height,
head circumference or arm length. Data were collected from a sample of 20 students.
From the scatterplot of height versus arm length, we can see that there is a strong, positive, linear
relationship between height and arm length: r = 0.8461. That is, those students with longer arms
also tended to be taller. There are no obvious outliers, and the linearity assumption is confirmed by
the residual plot. The equation of the least squares regression line is:
height = 44.09 + 1.742 × arm length
The slope of the regression line predicts an increase of 1.742 cm in height for each 1 cm increase in
arm length.
From the scatterplot of height versus head circumference, we can see that there is a moderate,
positive, linear relationship between height and arm length: r = 0.480. That is, those students with
larger head circumference also tended to be taller. There are no obvious outliers, and the linearity
assumption is confirmed by the residual plot. The equation of the least squares regression line is:
height = 2.97 + 2.894 × head circumference
The slope of the regression line predicts an increase of 2.894 cm in height for each 1 cm increase in
head circumference.
Comparing the values of the coefficient of determination for each variable we can see that for this
sample 71.6% of the variation in height is explained by the variation in arm length, while only
23% of the variation in height is explained by the variation in head circumference. Based on this
­comparison, we conclude that arm length is a much better predictor of height than head
circumference.

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 2D 2D Conducting an investigation – solving practical problems 93  

Exercise 2D
Example 10 1 The following table shows the results of a study of obesity for a sample of 12 women

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and eight men. The lean body mass, in kilograms, and the resting metabolic rate for
each subject in the sample is shown. The researchers hypothesised that lean body
mass (a person’s weight after allowing for all fat) would have a strong association
with metabolic rate. Use the data below to investigate this hypothesis.

Subject Sex Mass (kg) Rate

1 M 53.1 1586
2 M 52.0 1871
3 M 47.3 1363
4 F 40.8 1192
5 F 52.1 1373
6 F 42.1 1421
7 M 63.0 1669
8 F 33.4 921
9 F 34.4 1049
10 M 62.7 1812
11 F 39.8 1174
12 M 51.9 1465
13 F 35.9 989
14 M 47.0 1442
15 F 43.0 1286
16 F 54.4 1420
17 F 42.7 1132
18 M 48.5 1607
19 F 48.5 1405
20 F 49.9 1481

Example 9 2 Researchers were interested in the attitudes to women’s role in society. They
hypothesised that attitudes might differ based on ethnicity, and that this relationship
might also differ for males and females. They also believe that attitudes may have
changed in the years between 1990 and 2010. Data were collected and on the basis of
these data the following tables were created. Use these analyses to report on the
researcher’s hypothesis.

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 94 Chapter 2 ■ Modelling associations between variables 2D

Males 1990 Ethnicity

A woman should devote her time to Australia UK Europe
her family
Agree 139 174 185
Neither 166 140 124
Disagree 299 276 156

Females 1990 Ethnicity

A woman should devote her time to Australia UK Europe
her family
Agree 147 160 145
Neither 126 121 113
Disagree 312 312 270

Males 2010 Ethnicity

A woman should devote her time to Australia UK Europe
her family
Agree 120 151 146
Neither 144 151 126
Disagree 597 604 485

Females 2010 Ethnicity

A woman should devote her time to Australia UK Europe
her family
Agree 58 63 74
Neither 116 121 112
Disagree 406 391 345

3 What is the attitude of Queensland to lowering the driving age? Is that attitude the
same for different age groups (under 18, from 18−30, over 30, for example)? Is it
the same for males and females? Carry out a statistical investigation to address this
question. You will need to collect appropriate data.
4 Is an individual’s reaction time faster when they use their dominant hand, compared to
their other hand? Carry out a statistical investigation to address this question. You will
need to collect appropriate data.

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 Chapter 2 Review 95  

Review
Key ideas and chapter summary
Linear regression The process of fitting a line to data is known as linear
AS regression.

Least squares method The least squares method is one way of finding the equation
of a regression line. It minimises the sum of the squares of the
residuals. It works best when there are no outliers.
The equation of the least squares regression line is given by
y = a + bx, where a represents the y-intercept of the line and
b the slope.

Residuals The vertical distance from a data point

to the straight line is called a residual:
residual value = data value − predicted value.

Using the regression line The regression line y = a + bx enables the value of y to be
determined for a given value of x.
For example, the regression line
   cost = 1.20 + 0.06 × number of pages
predicts that the cost of a 100-page book is:
   cost = 1.20 + 0.06 × 100 = $7.20

Slope and intercept The slope of the regression line above predicts that the
cost of a textbook increases by 6 cents ($0.06) for each
additional page.The intercept of the line predicts that a book
with no pages costs $1.20 (this might be the cost of the cover).

Residual plots Residual plots can be used to test the linearity assumption by
plotting the residuals against the EV.
A residual plot that appears to be a random collection of
points clustered around zero supports the linearity assumption.
A residual plot that shows a clear pattern indicates that the
association is not linear.

Interpolation and Predicting within the range of data is called interpolation.

­extrapolation Predicting outside the range of data is called extrapolation.

Correlation and causation A correlation between two variables does not automatically
imply that the association is causal. Alternative non-causal
explanations for the association include a common response
to a common third variable, a confounded variable or simply
coincidence.

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 96 Chapter 2 ■ Modelling associations between variables
Review

Skills check
Having completed this chapter you should be able to:
rsy
■■ determine the equation of the least squares line using the formulas b = sx
and
a = y − bx
■■ for raw data, determine the equation of the least squares line using a scientific calculator
■■ interpret the slope and intercept of a regression line
■■ interpret the coefficient of determination as part of a regression analysis
■■ use the regression line for prediction
■■ calculate residuals
■■ construct a residual plot using a spreadsheet
■■ use a residual plot to determine the appropriateness of using the equation of the least
squares line to model the association
■■ present the results of a regression analysis in report form.

Multiple-choice questions
1 When using a least squares regression line to model a relationship displayed in a
scatterplot, one key assumption is that:
A there are two variables
B the variables are related
C the variables are linearly related
D r2 > 0.5
E the correlation coefficient is positive

2 In the least squares regression line y = −1.2 + 0.52x:

A the y-intercept = −0.52 and slope = −1.2
B the y-intercept = 0 and slope = −1.2
C the y-intercept = 0.52 and slope = −1.2
D the y-intercept = −1.2 and slope = 0.52
E the y-intercept = 1.2 and slope = −0.52

3 If the equation of a least squares regression line is y = 8 − 9x and R2 = 0.25:

A r = −0.5 B r = −0.25 C r = −0.0625 D r = 0.25 E r = 0.50

4 The least squares regression line y = 8 − 9x predicts that, when x = 5, the value of y is:
A −45 B −37 C 37 D 45 E 53

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 Chapter 2 Review 97  

Review
5 A least squares regression line of the form
x 25 15 10 5
y = a + bx is fitted to the data set shown.
y 10 10 15 25
The equation of the line is:
A y = −0.69 + 24.4x B y = 24.4 − 0.69x C y = 24.4 + 0.69x
D y = 28.7 − x E y = 28.7 + x

6 A least squares regression line of the form y 30 25 15 10

y = a + bx is fitted to the data set shown.
x 40 20 30 10
The equation of the line is:
A y = 1 + 0.5x B y = 0.5 + x C y = 0.5 + 7.5x
D y = 7.5 + 0.5x E y = 30 − 0.5x

7 Given that r = 0.733, sx = 1.871 and sy = 3.391, the slope of the least squares
regression line is closest to:
A 0.41 B 0.45 C 1.33 D 1.87 E 2.49

8 Using a least squares regression line, the predicted value of a data point is 78.6. The
residual value is –5.4. The actual data value is:
A 73.2 B 84.0 C 88.6 D 94.6 E 424.4

9 The equation of the least squares regression line y

plotted on the scatterplot opposite is closest to: 10
A y = 8.7 − 0.9x 9
8
B y = 8.7 + 0.9x 7
C y = 0.9 − 8.7x 6
D y = 0.9 + 8.7x 5
4
E y = 8.7 − 0.1x 3
2
1
0 x
0 1 2 3 4 5 6 7 8 9 10
10 The equation of the least squares regression line y
plotted on the scatterplot opposite is closest to: 10
A y = −14 + 0.8x 9
B y = 0.8 + 14x 8
7
C y = 2.5 + 0.8x 6
D y = 14 − 0.8x 5
4
E y = 17 + 1.2x 3
2
1
0 x
20 22 24 26 28 30

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 98 Chapter 2 ■ Modelling associations between variables
Review

Use the following information to answer Questions 11 to 14.

Weight (in kg) can be predicted from height (in cm) using the regression line:
weight = −96 + 0.95 × height, with r = 0.79

11 Which of the following statements relating to the regression line is false?

A The slope of the regression line is 0.95.
B The explanatory variable in the regression equation is height.
C The least squares line does not pass through the origin.
D The intercept is 96.
E The equation predicts that a person who is 180 cm tall will weigh 75 kg.

12 This regression line predicts that, on average, weight:

A decreases by 96 kg for each 1 centimetre increase in height
B increases by 96 kg for each 1 centimetre increase in height
C decreases by 0.79 kg for each 1 centimetre increase in height
D decreases by 0.95 kg for each 1 centimetre increase in height
E increases by 0.95 kg for each 1 centimetre increase in height

13 Noting that the value of the correlation coefficient is r = 0.79, we can say that:
A 62% of the variation in weight can be explained by the variation in height
B 79% of the variation in weight can be explained by the variation in height
C 88% of the variation in weight can be explained by the variation in height
D 79% of the variation in height can be explained by the variation in weight
E 95% of the variation in height can be explained by the variation in weight

14 A person of height 179 cm weighs 82 kg. If the regression equation is used to predict
their weight, then the residual will be closest to:
A –8 kg B 3 kg C –3 kg D 9 kg E 74 kg

15 The coefficient of determination for the 100

data displayed in the scatterplot opposite 90
80
is close to R2 = 0.5.
Mark (%)

70
The correlation coefficient is closest to: 60
A −0.7 50
40
B −0.25 30
C 0.25 20
D 0.5 10
0
E 0.7 0 1 2 3 4 5 6 7 8
Days absent

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 Chapter 2 Review 99  

Review
16 There is a strong, linear, positive correlation (r = 0.85) between the amount of
garbage recycled and salary level.
From this information, we can conclude that:
A the amount of garbage recycled can be increased by increasing people’s salaries
B the amount of garbage recycled can be increased by decreasing people’s salaries
C increasing the amount of garbage you recycle will increase your salary
D people on high salaries tend to recycle less garbage
E people on high salaries tend to recycle more garbage

17 There is a strong, linear, positive correlation (r = 0.95) between the marriage rate in
Kentucky and the number of people who drown falling out of a fishing boat.
From this information, the most likely conclusion we can draw is:
A reducing the number of marriages in Kentucky will decrease the number of people
who drown falling out of a fishing boat
B increasing the number of marriages in Kentucky will increase the number of people
who drown falling out of a fishing boat
C this correlation is just coincidence, and a change in the marriage rate will not affect
the number of people drowning in Kentucky in any way
D only married people in Kentucky drown falling out of a fishing boat
E stopping people from going fishing will reduce the marriage rate in Kentucky

Short-answer questions
1 What are the three assumptions which must be met when we fit a least squares

SF
regression line to bivariate data?

2 Find the values of a and b in the linear equation:

y = a + bx
where r = 0.75, x = 12.6, sx = 2.4, y = 124.8, sy = 8.4

3 If the correlation coefficient is equal to 0:

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a What does this tell us about the slope of the least squares regression line?
b What does this tell us about the intercept of the least squares regression line?

4 A retailer recorded the number of ice creams sold and the day’s maximum temperature
SF

over 8 consecutive Saturdays one summer. Use the data in the table to determine the
equation of the least squares regression line for these data. Write your equation in
terms of the variable in the table.
Temperature (°C) 22 25 36 34 21 28 41 31
Number of ice creams sold 145 155 200 198 150 179 230 180

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 100 Chapter 2 ■ Modelling associations between variables
Review

5 The actual price of a 10-year-old car is $15 600. Calculate the residual when its price is
predicted using the regression equation: price = 57 500 − 4250 × age

6 The relationship between two variables y and x as shown is non-linear as shown in the

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scatterplot below.

Sketch the residual plot which would result when the straight line shown is fitted to
this data

7 A regression equation that enables the price of a second-hand caravan to be predicted

CF
from its age is:
price = 87 500 − 5675 × age
a Interpret the slope in terms of the variables price and age
b Interpret the intercept in terms of the variables price and age

8 In a recent study across a number of countries the correlation between educational

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attainment and the amount spent on education was found to be 0.23, whilst the
correlation between educational attainment and the student : teacher ratio was found
to be –0.34.
a Interpret each of these correlation coefficients in terms of the variables in the study.
b Which of the variables, amount spent on education or student : teacher ratio is more
important in explaining the variation in educational attainment? Explain your answer.

9 The relationship between reaction time (in seconds) in a certain experiment and age
CF

(in years), based on a sample of a group of adults aged 40–70 years old, was found to be:
reaction time = 1.93 + 0.036 × age
Use the equation to predict (to two decimal places) the reaction time for:
a A person aged 55 years
b A person aged 35 years
c Comment on the reliability of each of these predictions.

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 Chapter 2 Review 101  

Review
10 The equation of a regression line that enables scores on a certain test to be predicted

SF
from IQ is:
score = 32 + 0.34 × IQ
Complete the following sentences:
a The response variable is .
b The slope is and the intercept is .
c A person has an IQ of 112. The equation predicts a test score of .
d This person has an actual test score of 78. The residual value is .

11 Explain the difference between correlation and causation, including an example of

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each to illustrate your explanation.

12 There is a strong correlation between level of maturity and the number of children a
person has. Can we assume from this that having children matures a person?

Extended-response questions
1 In an investigation of the relationship between the number of hours of sunshine

CF
(per year) and the number of days of rain (per year) for 25 cities, the least squares
regression line was found to be:
   hours of sunshine = 2850 − 6.88 × days of rain, with R2 = 0.484
Use this information to complete the following sentences.
a In this regression equation, the explanatory variable is .
b The slope is and the intercept is .
c The regression equation predicts that a city that has 120 days of rain per year will
have hours of sunshine per year.
d The slope of the regression line predicts that the hours of sunshine per year will
by hours for each additional day of rain.
e r= , correct to three significant figures.
f % of the variation in sunshine hours can be explained by the variation in
.
g One of the cities used to determine the regression equation had 142 days of rain
and 1390 hours of sunshine.
i The regression equation predicts that it has hours of sunshine.
ii The residual value for this city is hours.
h Using a regression line to make predictions within the range of data used to
determine the regression equation is called .

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 102 Chapter 2 ■ Modelling associations between variables
Review

2 The cost of preparing meals in a school canteen is linearly related to the number of
meals prepared. To help the caterers predict the costs, data were collected on the cost
of preparing meals for different levels of demands. The data are shown below.

Number of meals 30 35 40 45 50 55 60 65 70 75 80
Cost (dollars) 138 154 159 182 198 198 214 208 238 234 244

a Which is the response variable?

b Use your calculator to show that the equation of the least squares regression line
that relates the cost of preparing meals to the number of meals produced is:
   cost = 81.5 + 2.10 × number of meals
c Use the equation to predict the cost of producing:
i 48 meals. In making this prediction are you interpolating or extrapolating?
ii 21 meals. In making this prediction are you interpolating or extrapolating?
d i Write down and interpret the intercept of the regression line.
ii Write down and interpret the slope of the regression line.
e If r = 0.978, write down the coefficient of determination and interpret.

3 In the scatterplot opposite, average 40 000

annual female income, in dollars,
Female income (dollars)

is plotted against average annual

35 000
male income, in dollars . This data
is provided, for 16 countries. A least
squares regression line is fitted to the 30 000
data.
25 000

20 000
30 000 40 000 50 000 60 000 70 000
Male income (dollars)
The equation of the least squares regression line for predicting female income from
male income is female income = 13 000 + 0.35 × male income.
a What is the explanatory variable?
b Complete the following statement by filling in the missing information.
From the least squares regression line equation it can be concluded that, for these
countries, on average, female income increases by $ __________ for each $1000
increase in male income.
c i Use the equation of the least squares regression line to predict the average
annual female income (in dollars) in a country where the average annual male
income is $15 000.
ii The prediction made in part c i is not likely to be reliable. Explain why.
©VCAA (2000)

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 Chapter 2 Review 103  

Review
4 We wish to find the equation of the least squares regression line that will enable a
person’s height (in cm) to be predicted from femur (thigh bone) length (in cm).
a Which is the response variable and which is the explanatory variable?
b Use the following summary statistics to determine the equation of the least squares
regression line that will enable height (y) to be predicted from femur length (x).
   r = 0.9939 x = 24.246 sx = 1.873 y = 166.092 sy = 10.086
Write the equation in terms of height and femur length. Give the slope and
intercept accurate to three significant figures.
c Interpret the slope of the regression equation in terms of height and femur length.
d Determine the value of the coefficient of determination and interpret in terms of
height and femur length.

5 The data below shows the height (in cm) of a group of 10 children aged 2 to 11 years.

Height (cm) 86.5 95.5 103.0 109.8 116.4 122.4 128.2 133.8 139.6 145.0
Age (years) 2 3 4 5 6 7 8 9 10 11

The task is to determine the equation of a least squares regression line that can be used
to predict height from age.
a In this analysis, which would be the response variable and which would be the
explanatory variable?
b Use your calculator to confirm that the equation of the least squares regression line
is height = 76.64 + 6.366 × age and r = 0.9973.
c Use the regression line to predict the height of a 1-year-old child. Give the answer
correct to the nearest cm. In making this prediction are you extrapolating or
interpolating?
d What is the slope of the regression line and what does it tell you in terms of the
variables involved?
e Calculate the value of the coefficient of determination and interpret in terms of the
relationship between age and height.
f Use the least squares regression equation to:
i predict the height of the 10-year-old child in this sample
ii determine the residual value for this child
g i Confirm that the residual plot for this 0.15
analysis is shown opposite.
Residual

0.00
ii Explain why this residual plot suggests
that a linear equation is not the most 0.15
appropriate model for this relationship. −0.30
2 3 4 5 6 7 8 9 1011
Age

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 104 Chapter 2 ■ Modelling associations between variables
Review

6 The table below shows the scores obtained by nine students on two tests. We want to
be able to predict test B scores from test A scores.

Test A score (x) 18 15 9 12 11 19 11 14 16

Test B score (y) 15 17 11 10 13 17 11 15 19

Use appropriate technology to perform each of the following steps of a regression
analysis.
a Construct a scatterplot. Name the variables test A and test B.
b Determine the equation of the least squares line along with the values of r and R2.
c Display the regression line on the scatterplot.
d Obtain a residual plot.
e Write a report summarising your findings.

7 The table below shows the test scores and number of careless errors made by the same
nine students on the two tests from 6. We want to be able to predict test score from the
number of careless errors made.

Test score 18 15 9 12 11 19 11 14 16
Careless errors 0 2 5 6 4 1 8 3 1

Use appropriate technology to perform each of the following steps of a regression

analysis.
a Construct a scatterplot. Name the variables score and errors.
b Determine the equation of the least squares line along with the values of r and R2.
Write answers correct to three significant figures.
c Display the regression line on the scatterplot.
d Obtain a residual plot.
e Write a report summarising your findings.

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 Chapter 2 Review 105  

Review
8 How well can we predict an adult’s weight from their birth weight? The weights of 12
adults were recorded, along with their birth weights. The results are shown.

Birth weight (kg) 1.9 2.4 2.6 2.7 2.9 3.2 3.4 3.4 3.6 3.7 3.8 4.1
Adult weight (kg) 47.6 53.1 52.2 56.2 57.6 59.9 55.3 58.5 56.7 59.9 63.5 61.2

a In this investigation, which would be the response variable and which would be the
explanatory variable?
b Construct a scatterplot.
c Use the scatterplot to:
i comment on the relationship between adult weight and birth weight in terms of
direction, outliers, form and strength
ii estimate the value of Pearson’s correlation coefficient, r
d Determine the equation of the least squares regression line, the coefficient of
determination and the value of Pearson’s correlation coefficient, r. Write answers
correct to three significant figures.
e Interpret the coefficient of determination in terms of adult weight and birth weight.
f Interpret the slope in terms of adult weight and birth weight.
g Use the regression equation to predict the weight of an adult with a birth weight of:
i 3.0 kg ii 2.5 kg iii 3.9 kg
Give answers correct to one decimal place.
h It is generally considered that birth weight is a ‘good’ predictor of adult weight.
Do you think the data support this contention? Explain.
i Construct a residual plot and use it to comment on the appropriateness of assuming
that adult weight and birth weight are linearly associated.

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 3
Chapter 3

Time series analysis

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 2 Time series analysis

▶▶ How do we recognise a time series data?

▶▶ How do we construct a time series plot?
▶▶ How do we identify trends, seasonality and irregular
fluctuations?
▶▶ How do we calculate and interpret seasonal indices?
▶▶ How do we calculate and interpret a trend line?
▶▶ How do we make forecasts of future values?

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 3A Time series data 107  

Introduction
In this chapter we will focus on a special case of numerical bivariate data, called time series
data. In time series data the explanatory variable is a measure of time (for example hour,
day, month or year), and we are concerned with understanding how the response variable is
changing over time.

3A Time series data

When data concerned with a variable is collected, observed or recorded at successive
intervals of time, it is referred to as time series data. An example of time series data is
Annual road accident fatalities for Australia, 1975−2017.

Year Fatalities Year Fatalities Year Fatalities Year Fatalities

1975 3634 1988 2887 1998 1755 2008 1437
1976 3456 1989 2801 1999 1764 2009 1491
1979 3587 1990 2331 2000 1817 2010 1353
1980 3403 1991 2113 2001 1737 2011 1277
1982 3252 1992 1974 2002 1715 2012 1300
1983 2755 1993 1953 2003 1621 2013 1187
1984 2822 1994 1928 2004 1583 2014 1150
1985 2941 1995 2017 2005 1627 2015 1209
1986 2888 1996 1970 2006 1598 2016 1293
1987 2772 1997 1767 2007 1603 2017 1225

Since a time series is just a special kind of two numerical variable example, where the
explanatory variable is time, we will begin by drawing a scatterplot of the data. In this
instance, the scatterplot is called a time series plot, with time always placed on the
horizontal axis. A time series plot differs from a normal scatterplot in that, in general, the
points will be joined by line segments in time order. An example of a time series plot, of the
road accident fatality data, is given below.

4000

3500

3000
Fatalities

2500

2000
1500

1000

1970 1980 1990 2000 2010 2020

Year Cambridge University Press
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 108 Chapter 3 ■ Time series analysis

Looking at the time series plot, we can readily see a clear trend of decreasing road fatalities,
which is good news for drivers, as this provides some evidence that the many efforts being
made to reduce the road toll across Australia have been effective.

Example 1 Constructing a time series plot

Maximum temperature was recorded each day for a week in a certain town. Construct a
time series plot of the data.
Day Mon Tues Wed Thur Fri Sat Sun
Temperature (°C) 20 21 25 36 34 25 26

Solution
1 In a time series plot, time (day Day is the EV – this will label the horizontal axis.
in this case) is always the ­Temperature is the RV – this will label the vertical axis.
explanatory variable (EV) and is
plotted on the horizontal axis.
2 Determine the scales for each A horizontal scale from 0–7 with intervals of 1 for each
axis. day would be suitable.
Temperature ranges from 20–36. A vertical scale from
15–40 with intervals of 5 would be suitable.
3 Set up the axes, and then plot 40
all seven data points as for a 35
Temp (°C)

­scatterplot. 30
25
20
15
Mon Tues Wed Thur Fri Sat Sun
Day
4 Complete the graph, by ­joining 40
consecutive data points with 35
Temp (°C)

straight lines. 30
25
20
15
Mon Tues Wed Thur Fri Sat Sun
Days

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  3A Time series data 109  

Example 2 Using Excel to construct a time series plot

Use the data from Example 1 to construct a time series plot using Excel.

Solution
1 Enter the data into two columns as shown below.
2 Select both columns (including headings) and on the Insert tab, in the Charts
group, click on Scatter and then the option Scatter with Straight Lines and
Markers.
3 Double click on each scale separately and edit to include the range of the data.
4 Axis labels can be added using the Add Chart Elements option when editing the
scale.
Spreadsheet

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 110 Chapter 3 ■ Time series analysis 3A

Exercise 3A

SF
Note: Save the time series plots constructed in this exercise for use in Exercise 3B.

Example 1 1 Construct a time series plot to display the following data.

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sales 2 23 35 50 31 45 23 67 70

2 Researchers recorded the number of penguins present on a remote island each month
for 12 months. Construct a time series plot of the data.

Month Number of penguins

January 449
February 214
March 170
April 265
May 434
June 102
July 180
August 241
September 311
October 499
November 598
December 674

3 The following table shows the minimum temperature in Brisbane during one week in
January. Construct a time series plot of the data.

Day Mon Tues Wed Thur Fri Sat Sun

Temperature (°C) 24.0 24.2 17.4 17.7 18.3 19.5 17.4

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 3A 3A Time series data 111  

4 A time series plot for the population of Australia over the period 2006–2017.
Construct a times series plot of the data.

Population of Australia 2006–2017

Year Population (1 000 000)
2017 24.5
2016 24.1
2015 23.8
2014 23.5
2013 23.1
2012 22.7
2011 22.3
2010 22.0
2009 21.7
2008 21.3
2007 20.8
2006 20.7

5 The table below shows the motor vehicle theft rate per 100 000 cars in Australia from
2003 to 2014. Construct a time series plot of the data.

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Theft
498.1 440.0 396.4 365.8 336.6 319.4 274.0 214.7 220.0 228.4 204.1 190.8
rate

Example 2 6 The table below shows the number of measles cases reported in Australia from 1988
to 2016. Use appropriate technology to construct a time series plot of the data.

Year Measles Year Measles Year Measles

1988 248 1998 327 2009 104
1989 169 1999 235 2010 70
1990 880 2000 108 2011 190
1991 1380 2001 141 2012 199
1992 1425 2002 32 2013 158
1993 4536 2003 91 2014 340
1994 4895 2004 70 2015 74
1995 1198 2005 10 2016 99
1996 498 2007 11
1997 853 2008 65
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 112 Chapter 3 ■ Time series analysis 3A

7 The table below shows carbon intensity (a measure of carbon emissions from coal) for
Australia for the years from 1961 to 2014. Use appropriate technology to construct a
time series plot of the data.

Year Carbon Year Carbon Year Carbon

intensity intensity intensity
1961 2.77 1979 3.02 1997 3.02
1962 2.78 1980 3.17 1998 3.05
1963 2.81 1981 3.29 1999 3.06
1964 2.91 1982 3.20 2000 3.05
1965 3.07 1983 3.21 2001 3.07
1966 2.91 1984 3.27 2002 3.12
1967 2.97 1985 3.33 2003 3.04
1968 2.98 1986 3.24 2004 3.04
1969 3.06 1987 3.30 2005 3.09
1970 2.90 1988 3.36 2006 3.09
1971 2.96 1989 3.30 2007 3.04
1972 2.96 1990 3.05 2008 3.04
1973 3.00 1991 3.07 2009 3.10
1974 2.92 1992 3.09 2010 3.06
1975 2.91 1993 3.05 2011 3.05
1976 2.82 1994 3.06 2012 3.06
1977 2.83 1995 3.04 2013 2.94
1978 3.04 1996 3.06 2014 2.88

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 3B Describing time series plots 113  

3B Describing time series plots

▶▶Looking for patterns in time series plots
The features we look for in a time series are:

■■trend ■■cycles
■■seasonality ■■structural change
■■possible outliers ■■irregular (random) fluctuations.
One or all of these features can be found in a time series plot.

Trend
Examining a time series plot we can often see a general upward or downward movement
over time. This indicates a long-term change over time that we call a trend.

Trend
The tendency for values in a time series to generally increase or decrease over a
significant period of time is called a trend.

One way of identifying trends on a time series graph is to draw a line that ignores the
fluctuations, but which reflects the overall increasing or decreasing nature of the plot. These
lines are called trend lines.
Trend lines have been drawn on the time series plots below to indicate an increasing trend
(line slopes upwards) and a decreasing trend (line slopes downwards).
Increasing trend

Decreasing trend

trend line
trend line

Time Time

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 114 Chapter 3 ■ Time series analysis

Sometimes, different trends are apparent in a time series for different time periods. For
example, in the time series plot of the birth rate data for Australia, shown below, there are
three distinct trends, which can be seen by drawing trend lines on the plot.

1.8

1.6 trend 1
trend 2
Birth rate

1.4

1.2

1.0 trend 3

0.8

1930 1940 1950 1960 1970 1980 1990 2000

Year

Each of these trends can be explained by changing socioeconomic circumstances.

Trend 1: Between 1940 and 1961 the birth rate in Australia grew quite dramatically.
Those in the armed services came home from the Second World War, and the economy grew
quickly. This rapid increase in the Australian birth rate during this period is known as the ‘Baby
Boom’.
Trend 2: From about 1962 until 1980 the birth rate declined very rapidly. Birth control
methods became more effective, and women started to think more about careers. This
period is sometimes referred to as the ‘Baby Bust’.
Trend 3: During the 1980s, and up until the early 2000s, the birth rate continues to decline
slowly for a complex range of social and economic reasons.

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 3B Describing time series plots 115  

Cycles

Cycles
Cycles are periodic movements in a time series, but over a period greater than 1 year.

Some cycles repeat regularly, and some do not. The following plot shows the
sunspot1 activity for the period 1900 to 2010. The period of this cycle is approximately
11 years.

200

150
Sunspots

100

50

0
1960
1900

1920

1970

1980

2000

2010
1910

1930

1940

1950

1990
Year

Many business indicators, such as interest rates or unemployment figures, also vary
in cycles, but their periods are usually less regular. Cycles with calendar-related
periods of 1 year or less are of special interest and give rise to what is called ‘seasonality’.

Seasonality

Seasonality
Seasonality is present when there is a periodic movement in a time series that has a
calendar-related period, for example, a year, a month or a week.

Seasonal movements tend to be more predictable than trends, and occur because of
variations in the weather, such as ice-cream sales, or institutional factors, like the increase
in the number of unemployed people at the end of the school year.

1 Sunspots are dark spots visible on the surface of the Sun that come and go over time.

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 116 Chapter 3 ■ Time series analysis

The plot below shows the total percentage of rooms occupied in hotels, motels and other
accommodation in Australia by quarter, over the years 1998–2000.
66
64
62
Rooms (%)

60
58
56
54
98

99

00
98

98

99

99

00

00

0
9

0
ar

ar

ar
n

ec

ec

ec
Ju

Se

Ju

Se

Ju

Se
M

M
D

D
Quarter
This time series plot reveals both seasonality and trend in the demand for accommodation.
The regular peaks and troughs in the plot that occur at the same time each year signal the
presence of seasonality. In this case, the demand for accommodation is at its lowest in the
June quarter and highest in the December quarter.
The upward sloping trend line signals the presence of a general increasing trend. This tells
us that, even though demand for accommodation has fluctuated from month to month,
demand for hotel and motel accommodation has increased over time.

Structural change

Structural change
Structural change is present when there is a sudden change in the established pattern of
a time series plot.

The time series plot below shows the electricity bill for a rental house (in kWh) for the
12 months of a year.
350
Electricity use (kWh)

300
250
200
150
100
50
0
b
ar
pr
ay
n
n

ug
p

ov
ec
ct
l
Ju
Fe

Ju
Ja

Se
O

D
M
A
M

Month

The plot reveals an abrupt change in electricity use in June to July. During this period, monthly
electricity use suddenly decreases from around 300 kWh per month from January to June

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 3B Describing time series plots 117  

to around 175 kWh for the rest of the year. This is an example of structural change that can
probably be explained by a change in tenants, from a family with two children to a person
living alone.
Structural change is also displayed in the birth rate time series plot we saw earlier. This
revealed three quite distinct trends during the period 1900–2010. These reflect significant
external events (like a war) or changes in social and economic circumstances.
One consequence of structural change is that we can no longer use a single mathematical
model to describe the key features of a time series plot.

Outliers

Outliers
Outliers are present when there are individual values that stand out from the general
body of data.

The time series plot below shows the daily electricity bill for a house (in kWh) for a fortnight.
Electricity use (kWh)

12
10
8
6
4
2
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Day

For this household, daily electricity use follows a regular pattern that, although fluctuating,
averages about 10 kWh per day. In terms of daily electricity use, day 4 is a clear outlier, with
less than 2 kWh of electricity used. A follow-up investigation found that, on this day, the house
was without power for 18 hours due to a storm, so much less power was used than normal.

Irregular (random) fluctuations

Irregular (random) fluctuations

Irregular (random) fluctuations include all the variations in a time series that we
cannot reasonably attribute to systematic changes like trend, cycles, seasonality and
structural change or an outlier.

There can be many sources of irregular fluctuations, mostly unknown. A general

characteristic of these fluctuations is that they are unpredictable.
One of the aims of time series analysis is to develop techniques to identify regular patterns
in time series plots that are often obscured by irregular fluctuations. One of these techniques
is smoothing, which you will meet in the next section.

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 118 Chapter 3 ■ Time series analysis 3B

Identifying patterns in time series plots

The features we look for in a time series are:
■■trend ■■
cycles ■■ seasonality
■ structural change ■
possible outliers ■■ irregular (random) fluctuations.
Trend is present when there is a long-term upward or downward movement in a time series.
Cycles are present when there is a periodic movement in a time series. The period is the
time it takes for one complete up and down movement in the time series plot. In practice,
this term is reserved for periods greater than 1 year.
Seasonality is present when there is a periodic movement in a time series that has a
calendar related period, for example, a year, a month or a week.
Structural change is present when there is a sudden change in the established pattern of a
time series plot.
Outliers are present when there are individual values that stand out from the general
body of data.
Irregular (random) fluctuations are always present in any real-world time series plot.
They include all the variations in a time series that we cannot reasonably attribute to
systematic changes like trend, cycles, seasonality and structural change or an outlier.

Exercise 3B
Note: You will need the time series plots constructed in Exercise 3A.

Identifying key features in a time series plot

1 Complete the table below by indicating which of the listed features are present in each

CF
of the time series plots.

Plot 40
35 plot A
Feature A B C
30
Irregular
fluctuations 25
plot B
Increasing trend 20
Decreasing trend 15
Cycles 10
Outlier
5
plot C
0
2014 2015 2016 2017 2018
Year

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 3B 3B Describing time series plots 119  

2 Complete the table below by indicating which of the listed features are present in each
of the time series plots.

Plot 40
plot A
35
Feature A B C
30
Irregular
fluctuations 25 plot B
Increasing trend 20
Decreasing trend 15
Cycles 10
Seasonality
5
plot C
0
2014 2015 2016 2017 2018
Year

3 Complete the table below by indicating which of the listed features are present in each
of the time series plots.

Plot 40
35
Feature A B C
30 plot A
Irregular
25
fluctuations
Structural change 20 plot B
Increasing trend 15
Decreasing trend 10
Seasonality 5 plot C
0
2014 2015 2016 2017 2018
Year
Describing time series plots

4 The time series plot shows the smoking 80

CU

rates (%) of Australian males and females 70

over the period 1945–92. 60
Smokers (%)

a Describe the trends in the time series 50

males
plot. 40
females
b Did the difference in smoking rates 30
increase or decrease over the period 20
1945–92? 10
0
1945 1955 1965 1975 1985 1995
Year

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 120 Chapter 3 ■ Time series analysis 3B

5 The time series plot opposite shows the number 70

Number of whales (’000s)

of whales caught between 1920–85. Describe 60
the features of the plot. 50
Note: This time series exhibits structural change so 40
cannot be described by a single trend. Here is some 30
relevant historical information: 20
■■ The 1930s was the time of the Great Depression. 10
■■ 1939–45 was the period of the Second World War. 0
■■ 1960–85 was a time when countries began to

20
30
40
50
60
70
80
19
19
19
19
19
19
19
accept that whales were endangered. Year
6 Describe the features of the time series plot of the Australian population between
2006–2017 constructed in Exercise 3A Question 4.

7 Describe the features of the time series plot of the motor vehicle theft rate per 100 000
cars in Australia from 2003 to 2014 constructed in Exercise 3A Question 5.

8 Describe the features of the time series plot of the number of measles cases reported
in Australia from 1988 to 2016 constructed in Exercise 3A Question 6.

9 Describe the features of the time series plot of carbon intensity (a measure of carbon
emissions from coal) for Australia for the years from 1961 to 2014 constructed in
Exercise 3A Question 7.

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 3C Smoothing a time series using moving means 121  

3C Smoothing a time series using moving means

A time series plot can incorporate many of the sources of variation previously mentioned:
trend, cycles, seasonality, structural change, outliers and irregular fluctuations. One effect
of the irregular fluctuations and seasonality can be to obscure an underlying trend. The
technique of smoothing can sometimes be used to overcome this problem.

▶▶Smoothing a time series plot using moving means

This method of smoothing (moving mean smoothing) involves replacing individual data
points in the time series with their moving means. The simplest method is to smooth over a
small number of odd number points, for example three or five.

The three-moving mean

To use three-moving mean smoothing, replace each data value with the mean of that
value and the values of its two neighbours, one on each side. That is, if y1, y2 and y3 are
sequential data values, then:
y1 + y2 + y3
smoothed y2 =
3

The first and last points do not have values on each side, so leave them out.

The five-moving mean

To use five-moving mean smoothing, replace each data value with the mean of that value and
the two values on each side. That is, if y1, y2, y3, y4, y5 are sequential data values, then:
y1 + y2 + y3 + y4 + y5
smoothed y3 =
5

The first two and last two points do not have two values on each side, so leave them out.

If needed, these definitions can be readily extended for moving means involving 7, 9, 11,…
points. The larger the number of points we smooth over, the greater the smoothing effect.

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 122 Chapter 3 ■ Time series analysis

Example 3 Three- and five-moving mean smoothing

The table below gives the temperature (°C) recorded at a weather station at 9 a.m. each
day for a week.

Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Temperature 18.1 24.8 26.4 13.9 12.7 14.2 24.9

a Calculate the three-mean smoothed temperature for Tuesday.

b Calculate the five-mean smoothed temperature for Thursday.
Solution
a 1 Write down the three 18.1, 24.8, 26.4
temperatures centred on (18.1 + 24.8 + 26.4)
Mean = = 23.1
Tuesday. 3
2 Find the mean and write The three-mean smoothed temperature for Tuesday is
down your answer. 23.1°C.
b 1 Write down the five 24.8, 26.4, 13.9, 12.7, 14.2
temperatures centred on
Thursday.
(24.8 + 26.4 + 13.9 + 12.7 + 14.2)
2 Find their mean and write Mean =
5
down your answer.
= 18.4
The five-mean smoothed temperature for Thursday is
18.4°C.

The next step is to extend these computations to smooth all terms in the time series.

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 3C Smoothing a time series using moving means 123  

Example 4 Three- and five-moving mean smoothing of a time series

The following table gives the number of births per month over a calendar year in a
­country hospital. Use the three-moving mean and the five-moving mean methods,
­correct to one decimal place, to complete the table.
Solution
Complete the calculations as shown below.

Month Number 3-moving mean 5-moving mean

of births
January 10

February 12 10 + 12 + 6
= 9.3
3
March 6 12 + 6 + 5 10 + 12 + 6 + 5 + 22
= 7.7 = 11.0
3 5
April 5 6 + 5 + 22 12 + 6 + 5 + 22 + 18
= 11.0 = 12.6
3 5
May 22 5 + 22 + 18 6 + 5 + 22 + 18 + 13
= 15.0 = 12.8
3 5
June 18 22 + 18 + 13 5 + 22 + 18 + 13 + 7
= 17.7 = 13.0
3 5
July 13 18 + 13 + 7 22 + 18 + 13 + 7 + 9
= 12.7 = 13.8
3 5
August 7 13 + 7 + 9 18 + 13 + 7 + 9 + 10
= 9.7 = 11.4
3 5
September 9 7 + 9 + 10 13 + 7 + 9 + 10 + 8
= 8.7 = 9.4
3 5
October 10 9 + 10 + 8 7 + 9 + 10 + 8 + 15
= 9.0 = 9.8
3 5
November 8 10 + 8 + 15
= 11.0
3
December 15

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 124 Chapter 3 ■ Time series analysis

The result of this smoothing can be seen in the plot below, which shows the raw data,
the data smoothed with a three-moving means and the data smoothed with a five-moving
means.
25

20 raw data
Number of births

3-moving mean
15 5-moving mean

10
5

0
ay
ar

ov
ug
pr

ec
b

ct
n

l
Ju
Fe

Ju

Se
Ja

D
M

N
Month

Note: In the process of smoothing, data points are lost at the beginning and end of the time series.

Two observations can be made from this plot:

1 five-mean smoothing is more effective in reducing the irregular fluctuations than

three-mean smoothing
2 the five-mean smoothed plot shows that there is no clear trend although the raw data
suggest that there might be an increasing trend.

There are many ways of smoothing a time series. Moving means of group size other than
three and five are common and often very useful.
However, if we smooth over an even number of points, we run into a problem. The centre of
the set of points is not at a time point belonging to the original series. Usually, we solve this
problem by using a process called centring. Centring involves taking a two-moving mean
of the already smoothed values so that they line up with the original time values. It is a two-
step process.

▶▶Two-mean smoothing with centring

We will illustrate the process by finding
Day Temperature
the two-moving mean, centred on
Tuesday, for the daily temperature data Monday 18.1
opposite. Tuesday 24.8
Wednesday 26.4

It is straightforward to calculate a series of two-moving means for this data by calculating

the mean for Monday and Tuesday, followed by the mean for Tuesday and Wednesday.
However, as we can see in the diagram overpage, these means do not align with a particular
day, but lie between days. We solve this problem by finding the average of these two means.
This gives a smoothed value that is now centred on Tuesday.

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 3C Smoothing a time series using moving means 125  

We call this process two-mean smoothing with centring.

Two-moving mean with

Day Temperature Two-moving means centring
Monday 18.1
(18.1 + 24.8) = 21.45
2
(21.45 + 25.6)
Tuesday 24.8 = 23.525
2
(24.8 + 26.4) = 25.60
2
Wednesday 26.4

In practice, we do not have to draw such a diagram to perform these calculations.

The purpose of doing so is to show how the centring process works. In practice,
calculating two-moving means is a much briefer and routine process as we illustrate in
the following example. However, before proceeding, you might find it useful to view the
video for this topic.

Example 5 Two-moving mean smoothing with centring

The temperatures (°C) recorded at a weather station at 9 a.m. each day for a week are
displayed in the table.

Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Temperature 18.1 24.8 26.4 13.9 12.7 14.2 24.9

Calculate the two-mean smoothed temperature for Tuesday with centring.

Solution
1 For two-mean smoothing with centring, 18.1 24.8 26.4
write down the three data values centred
on Tuesday (highlighted in red).
(18.1 + 24.8)
2 Calculate the mean of the first two Mean 1 =
2
­values (mean 1). Calculate the mean of
the second two values (mean 2).
(24.8 + 26.4)
Mean 2 =
2
(mean 1 + mean 2)
3 The centred mean is then the average of Centred mean =
2
mean 1 and mean 2.
(21.45 + 25.6)
=
2
= 23.525
4 Write down your answer. The two-mean smoothed temperature, centred
on Tuesday, is 23.5°C (to one decimal place).

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 126 Chapter 3 ■ Time series analysis

The process of four-mean smoothing with centring is the same as two-mean smoothing
except that you smooth values in groups of four.

Example 6 Four-moving mean smoothing with centring

The table below gives the temperature (°C) recorded at a weather station at 9 a.m. each
day for a week.

Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Temperature 18.1 24.8 26.4 13.9 12.7 14.2 24.9

Calculate the four-mean smoothed temperature with centring for Thursday.

Solution
1 For four-mean smoothing with centring, 24.8 26.4 13.9 12.7 14.2
write down the five data values centred on
Thursday.
2 Calculate the mean of the first four values (24.8 + 26.4 + 13.9 + 12.7)
(mean 1) and the mean of the last four
Mean 1 =
4
values (mean 2). = 19.45
(26.4 + 13.9 + 12.7 + 14.2)
Mean 2 =
4
= 16.8
3 The centred mean is then the average of (mean 1 + mean 2)
mean 1 and mean 2.
Centred mean =
2
(19.45 + 16.8)
=
2
= 18.125
4 Write down your answer. The four-mean smoothed temperature
­centred on Thursday is 18.1°C (to one decimal
place).

The next step is to extend these computations to smooth all terms in the time series.

Example 7 Smoothing a time series using Excel

Consider again the data in Example 3:

Day Mon Tues Wed Thur Fri Sat Sun

Temperature (°C) 18.1 24.8 26.4 13.9 12.7 14.2 24.9
Use Excel to construct a plot showing the data, the three-mean smoothed plot, and the
five-mean smoothed plot, all on the same axes.

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 3C Smoothing a time series using moving means 127  

Solution
1 Enter the data into two columns. Place the cursor in cell D4, next to the temperature
on Tuesday and enter the formula =(C3+C4+C5)/3 as shown below. Press Enter and
the mean of these three cells will be calculated.
Spreadsheet

2 Fill down the column with the formula, remembering to omit the first and last row, to
calculate all three-mean smoothed values.
3 Place the cursor in cell E5, next to the temperature on Wednesday and enter the
­formula =(C3+C4+C5+C6+C7)/5 as shown below. Press Enter and the mean of
these five cells will be calculated.

4 Fill down the column with the formula, remembering to omit the first and last two
rows, to calculate all five-mean smoothed values (see below).
5 Select all four data columns (including headings) and on the Insert tab, in the Charts
group, click on 2D-Line and then the option Lines with Markers.
6 Double click on each scale separately and edit as appropriate.
7 Axis labels can be added using the Add Chart Elements option when editing the scale.

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 128 Chapter 3 ■ Time series analysis 3C

Exercise 3C
Basic skills

Use the information below to answer Questions 1 to 5.

The table below gives the temperature (°C) recorded at a weather station at 3 p.m. each day
for a week.
Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Temperature (°C) 28.9 33.5 21.6 18.1 16.2 17.9 26.4

Example 3 1 The three-mean smoothed temperature for Wednesday is closest to:

SF
A 20.0 B 23.2 C 24.4 D 29.4 E 31.2

2 The five-mean smoothed temperature for Friday is closest to:

A 20.0 B 23.2 C 24.4 D 29.4 E 31.2

3 The seven-mean smoothed temperature for Thursday is closest to:

A 20.0 B 23.2 C 24.4 D 28.0 E 31.2

4 The two-mean smoothed temperature with centring for Tuesday is closest to:
A 19.1 B 20.0 C 24.4 D 29.4 E 31.2

5 The four-mean smoothed temperature for Friday is closest to:

A 19.1 B 20.0 C 23.2 D 28.0 E 31.2

Calculating the smoothed value of individual data points

Example 4 6
t 1 2 3 4 5 6 7 8 9
y 5 2 5 3 1 0 2 3 0

For the time series data in the table above, find:

a the three-mean smoothed y-value for t = 4
b the three-mean smoothed y-value for t = 6
c the three-mean smoothed y-value for t = 2
d the five-mean smoothed y-value for t = 3
e the five-mean smoothed y-value for t = 7
f the five-mean smoothed y-value for t = 4
g the two-mean smoothed y-value centred at t = 3
h the two-mean smoothed y-value centred at t = 8
i the four-mean smoothed y-value centred at t = 3
j the four-mean smoothed y-value centred at t = 6.
Note: Copies of the tables in Questions 7 to 11 can be accessed via the skillsheet icon in the Interactive
Textbook.

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 3C 3C Smoothing a time series using moving means 129  

Smoothing a table of values

Spreadsheet 7 Complete the following table.

t 1 2 3 4 5 6 7 8 9
y 10 12 8 4 12 8 10 18 2
Three-mean smoothed y – –
Five-mean smoothed y – – – –

Smoothing and plotting a time series (three- and five-mean smoothing)

8 The maximum temperature of a city over a period of 10 days is given below.

Day 1 2 3 4 5 6 7 8 9 10
Temperature (°C) 24 27 28 40 22 23 22 21 25 26
Three-moving mean
Five-moving mean
a Construct a time series plot of the temperature data.
b Use the three-mean and five-mean smoothing method to complete the table.
c Plot the smoothed temperature data and compare and comment on the plots. This
is best done if all plots are on the same graph.

9 The value of the Australian dollar in US dollars (exchange rate) over 10 days is given below.
Day 1 2 3 4 5 6 7 8 9 10
Exchange rate 0.743 0.754 0.737 0.751 0.724 0.724 0.712 0.735 0.716 0.711
Three-moving mean
Five-moving mean
a Construct a time series plot of the data. Label and scale the axes.
b Use the three-mean and five-mean smoothing method to complete the table.
c Plot the smoothed exchange rate data and compare the plots and comment on the
plots. This is best done if all three plots are on the same graph.

Smoothing a time series (two- and four-mean smoothing)

Example 5 10 Construct a table with four columns: ‘Month’, ‘Number of births’, ‘Two-moving
CF

mean’ and ‘Two-moving mean with centring’ using the following data.

Month Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Number of births 10 12 6 5 22 18 13 7 9 10 8 15

Example 6 11 Construct a table with four columns: ‘Month’, ‘Internet usage’, ‘Four-moving mean’
and ‘Four-moving mean with centring’ using the following data.

Month Apr May Jun July Aug Sep Oct Nov Dec
Internet usage 21 40 52 42 58 79 81 54 50

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 130 Chapter 3 ■ Time series analysis

3D Seasonal indices
When the data is seasonal, it is often necessary to deseasonalise the data before further
analysis. To do this we need to calculate seasonal indices.

▶▶The concept of a seasonal index

Consider the (hypothetical) monthly seasonal indices for unemployment given in the table.

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
1.1 1.2 1.1 1.0 0.95 0.95 0.9 0.9 0.85 0.85 1.1 1.1 12.0

Key fact 1
Seasonal indices are calculated so that their average is 1. This means that the sum of the
seasonal indices equals the number of seasons.
Thus, if the seasons are months, the seasonal indices add to 12. If the seasons are quarters,
then the seasonal indices would to 4, and so on.
Key fact 2
Seasonal indices tell us how a particular season (generally a day, month or quarter)
compares to the average season.
For example:

■■seasonal index for unemployment for the month of February is 1.2 or 120%.
This tells us that February unemployment figures tend to be 20% higher than the monthly
average. Remember, the average seasonal index is 1 or 100%.

■■seasonal index for August is 0.90 or 90%.

This tells us that the August unemployment figures tend to be only 90% of the monthly
average. Alternatively, August unemployment figures are 10% lower than the monthly average.
We can use seasonal indices to remove the seasonal component (deseasonalise) from a time
series, or to put it back in (reseasonalise).

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 3D Seasonal indices 131  

▶▶Using seasonal indices to deseasonalise or reseasonalise a time

series
To calculate deseasonalised figures, each entry is divided by its seasonal index as follows.

Deseasonalising data
Time series data are deseasonalised using the relationship:
actual figure
deseasonalised figure =
seasonal index

Example 8 Using a seasonal index to deseasonalise data

The seasonal index (SI) for cold drink sales for summer is SI = 1.33.
Last summer a beach kiosk’s actual cold drink sales totalled $15 653.
What were the deseasonalised sales?

Solution
Use the rule 15 653
Deseasonalised sales =
deseasonalised sales =
actual sales 1.33
seasonal index = 11 769.17
with actual sales = $15 653 The deseasonalised sales for summer were
and SI = 1.33. $11 769.17.

The rule for determining deseasonalised data values can also be used to reseasonalise data;
that is, convert a deseasonalised value into an actual data value.

Reseasonalising data
Time series data are reseasonalised using the rule:
actual figure = deseasonalised figure × seasonal index

Example 9 Using a seasonal index to reseasonalise data

The seasonal index for cold drink sales in spring is SI = 0.85.
Last spring a beach kiosk’s deseasonalised cold drink sales totalled $10 870.
What were the actual sales?

Solution
Use the rule Actual sales = 10 870 × 0.85
actual sales = deseasonalised sales × seasonal index = 9239.50
with deseasonalised sales = $10 870 and SI = 0.85.
The actual sales for spring were
$9239.50.

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 132 Chapter 3 ■ Time series analysis

Example 10 Deseasonalising a time series

The quarterly sales figures for Mikki’s shop over a 3-year period are given below.

Year Summer Autumn Winter Spring

1 920 1085 1241 446
2 1035 1180 1356 541
3 1299 1324 1450 659
Use the seasonal indices shown to
­deseasonalise these sales figures. Write Summer Autumn Winter Spring
answers correct to the nearest whole 1.03 1.15 1.30 0.52
­number.

Solution
1 To deseasonalise each sales figure in the 920
= 893
table, divide by the appropriate seasonal 1.03
index. 1035
= 1005
For example, for summer, divide the 1.03
figures in the ‘Summer’ column by 1.03. 1299
Round results to the nearest whole
= 1261
1.03
number.
2 Repeat for the other seasons. Deseasonalised sales figures
Year Summer Autumn Winter Spring
1 893 943 955 858
2 1005 1026 1043 1040
3 1261 1151 1115 1267

▶▶Comparing a plot of the raw data with the deseasonalised data

The plot below shows the time series deseasonalised sales.
1600
1400 actual sales
1200
1000
Sales

800 deseasonalised
600
400
200
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Quarter

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 3D Seasonal indices 133  

Two things to notice are that deseasonalising has:

■■removed the seasonality from the time series plot

■■revealed a clear underlying trend in the data.
It is common to deseasonalise time series data before you fit a trend line.

▶▶Calculating seasonal indices

To complete this section, you will now learn to calculate a seasonal index. We will start by
using only 1 year’s data to illustrate the basic ideas and then move onto a more realistic
example where several years’ data are involved.

Example 11 Calculating seasonal indices (1 year’s data)

Mikki runs a shop and wishes to

determine quarterly seasonal indices Summer Autumn Winter Spring
based on last year’s sales (shown in 920 1085 1241 446
table opposite).

Solution
1 The seasons are quarters. Write the value for season
formula in terms of quarters.
Seasonal index =
seasonal average
2 Find the quarterly average for the 920 + 1085 + 1241 + 446
Quarterly average =
year. 4
= 923
3 Work out the seasonal index (SI) 920
SISummer = = 0.997
for each time period. 923
1085
SIAutumn = = 1.176
923
1241
SIWinter = = 1.345
923
446
SISpring = = 0.483
923
4 Check that the seasonal indices Check: 0.997 + 1.176 + 1.345 + 0.483 = 4.001
sum to 4 (the number of seasons).
The slight difference is due to
rounding error.
5 Write out your answers as a table Seasonal indices
of the seasonal indices.
Summer Autumn Winter Spring
0.997 1.176 1.345 0.483

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 134 Chapter 3 ■ Time series analysis

The next example illustrates how seasonal indices are calculated with 3 years’ data. While
the process looks more complicated, we just repeat what we did in Example 11 three times
and average the results for each year at the end.

Example 12 Calculating seasonal indices (several years’ data)

Suppose that Mikki has 3 years of data, as shown. Use the data to calculate seasonal
­indices, correct to two decimal places.

Year Summer Autumn Winter Spring

1 920 1085 1241 446
2 1035 1180 1356 541
3 1299 1324 1450 659

Solution
The strategy is as follows:
■■ Calculate the seasonal indices for years 1, 2 and 3 separately, as Example 11 (as we
already have the seasonal indices for year 1 from Example 11, we will save ourselves
some time by simply quoting the result).
■■ Average the three sets of seasonal indices to obtain a single set of seasonal indices.
1 Write down the result for year 1. Year 1 seasonal indices:
Summer Autumn Winter Spring
0.997 1.176 1.345 0.483
2 Now calculate the seasonal indices
for year 2.
a The seasons are quarters. Write value for quarter
the formula in terms of quarters. Seasonal index =
quarterly average
b Find the quarterly average for 1035 + 1180 + 1356 + 541
Quarterly average =
the year. 4
= 1028
c Work out the seasonal index (SI) 1035
SISummer = = 1.007
for each time period. 1028
1180
SIAutumn = = 1.148
1028
1356
SIWinter = = 1.319
1028
541
SISpring = = 0.526
1028

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 3D Seasonal indices 135  

d Check that the seasonal indices Check: 1.007 + 1.148 + 1.319 + 0.526 = 4.000
sum to 4.
e Write out your answers as a Year 2 seasonal indices:
table of the seasonal indices.
Summer Autumn Winter Spring
1.007 1.148 1.319 0.526
3 Now calculate the seasonal indices
for year 3.
a Find the quarterly average for 1299 + 1324 + 1450 + 659
Quarterly average =
the year. 4
= 1183
b Work out the seasonal index (SI) 1299
SISummer = = 1.098
for each time period. 1183
1324
SIAutumn = = 1.119
1183
1450
SIWinter = = 1.226
1183
659
SISpring = = 0.557
1183
c Check that the seasonal indices Check: 1.098 + 1.119 + 1.226 + 0.557 = 4.000
sum to 4.
d Write out your answers as a Year 3 seasonal indices:
table of the seasonal indices.
Summer Autumn Winter Spring
1.098 1.119 1.226 0.557
4 Find the 3-year averaged seasonal Final seasonal indices:
indices by averaging the seasonal 0.997 + 1.007 + 1.098
indices for each season. SISummer = = 1.03
3
1.176 + 1.148 + 1.119
SIAutumn = = 1.15
3
1.345 + 1.319 + 1.226
SIWinter = = 1.30
3
0.483 + 0.526 + 0.557
SISpring = = 0.52
3
5 Check that the seasonal Check: 1.03 + 1.15 + 1.30 + 0.52 = 4.00
indices sum to 4.
6 Write out your answers as a
Summer Autumn Winter Spring
table of the seasonal indices.
1.03 1.15 1.30 0.52

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 136 Chapter 3 ■ Time series analysis

Example 13 Using Excel to calculate seasonal indices

Using the information in Example 12 repeat the calculation of seasonal indices for
­Mikki’s shop using Excel.
Solution
1 Enter the data table as given in the question into Excel.
2 In cell G3 enter the formula =(C3+D3+E3+F3)/4 to calculate the ­quarterly average
for the first year. Press enter then Fill down to complete all quarterly ­averages.
Spreadsheet

3 Now determine the seasonal indices for year 1, by entering the formulas as follows:
C7: =C3/G3
D7: =D3/G3
E7: =E3/G3
F7: =F3/G3

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 3D Seasonal indices 137  

4 Select cells C7, D7, E7, and F7 and Fill down two further rows, to determine the
­seasonal indices for each of the three years.

5 Finally, determine the average of the three years seasonal indices by entering
into C10 the formula =(C7+C8+C9)/3 as shown.

6 Select cell C10 and then Fill right to complete the seasonal indice calculations.
Round to two decimal places.

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 138 Chapter 3 ■ Time series analysis

▶▶Interpreting the seasonal indices

Having calculated these seasonal indices, what do they tell us?
The seasonal index of:

■■1.03 for summer tells us that summer sales are typically 3% above average
■■1.15 for autumn tells us that autumn sales are typically 15% above average
■■1.30 for winter tells us that winter sales are typically 30% above average
■■0.52 for spring tells us that spring sales are typically 48% below average.
▶▶Correcting for seasonality
Also, using the rule
actual figure
deseasonalised figure =
seasonal index

we can work out how much we need to increase or decrease the actual sales figures to
correct for seasonality.
For example, we see that for winter:
actual figure
deseasonalised figure =
1.30
= 0.769… × actual figure ≈ 77% of the actual figures

Thus, to correct the seasonality in winter, we need to decrease the actual sales by about 23%.
Similarly we can show that, to correct for seasonality in spring (SIspring = 0.52), we need to

(0.52 )
1
increase the actual spring sales figure by around 92% ≈ 1.92 .

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 3D 3D Seasonal indices 139  

Exercise 3D
Skillsheet Basic skills and interpretation
Use the following information to answer Questions 1 to 8.
The table below shows the monthly sales figures (in $’000s) and seasonal indices
(for January to November) for a product produced by the U-beaut company.
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Seasonal index 1.2 1.3 1.1 1.0 1.0 0.9 0.8 0.7 0.9 1.0 1.1
Sales ($'000s) 9.6 10.5 8.6 7.1 6.0 5.4 6.4 7.2 8.3 7.4

1 The seasonal index for December is:

SF
A 0.8 B 0.9 C 1.0 D 1.1 E 1.2
Example 8 2 The deseasonalised sales (in $’000s) for March is closest to:
A 7.7 B 7.8 C 8.6 D 9.5 E 10.3

3 The deseasonalised sales (in $’000s) for June is closest to:

A 5.4 B 5.9 C 6.0 D 6.6 E 6.7

Example 9 4 The deseasonalised sales (in $’000s) for August are 5.6. The actual sales are
closest to:
A 2.7 B 3.9 C 5.6 D 5.9 E 7.3

5 The deseasonalised sales (in $’000s) for April are 6.9. The actual sales are closest to:
A 5.4 B 6.3 C 6.9 D 7.6 E 8.3

6 The seasonal index for February tells us that, over time, February sales tend to be

CF
greater than the average monthly sales by:
A 0% B 10% C 20% D 30% E 70%

7 The seasonal index for September tells us that September sales tend to be less than the
average monthly sales by:
A 0% B 10% C 20% D 30% E 90%

8 The seasonal index for January is 1.2. To correct the monthly sales figure for
seasonality we need to:
A decrease the actual sales figures by around 20%
B increase the actual sales figures by around 20%
C decrease the actual sales figures by around 17%
D increase the actual sales figures by around 17%
E increase the actual sales figures by around 80%

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 140 Chapter 3 ■ Time series analysis 3D

Use the following information to answer Questions 9 to 12.

The table below shows the quarterly newspaper sales (in $’000s) of a corner store. Also
shown are the seasonal indices for newspaper sales in the first, second and third quarters.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Sales 1060 1868 1642
Seasonal index 0.8 0.7 1.3

9 The seasonal index for quarter 4 is:

SF
A 0.8 B 0.7 C 1.0 D 1.2 E 1.3

10 The deseasonalised sales (in $’000s) for quarter 2 are closest to:
A 742 B 980 C 1060 D 1514 E 1694

11 The deseasonalised sales (in $’000s) for quarter 3 are closest to:
A 1437 B 1678 C 1868 D 2428 E 2567

12 The deseasonalised sales (in $’000s) for quarter 1 are 1256. The actual sales are
closest to:
A 986 B 1005 C 1256 D 1570 E 1678

Deseasonalising a time series

Example 10 13 The following table shows the number of students enrolled in a 3-month computer

CF
systems training course along with seasonal indices that have been calculated from the
previous year’s enrolment figures. Complete the table.

Summer Autumn Winter Spring

Number of students 56 125 126 96
Deseasonalised numbers
Seasonal index 0.5 1.0 1.3

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 3D 3D Seasonal indices 141  

14 The number of waiters employed by a restaurant chain in each quarter, along with

SF
some seasonal indices, are given in the following table.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Number of waiters 198 145 86 168
Seasonal index 1.30 0.58 1.10

a What is the seasonal index from the second quarter?

b The seasonal index for quarter 1 is 1.30. Explain what this means in terms of the
average quarterly number of waiters.
c Deseasonalise the data.

Calculating seasonal indices

15 The table below records quarterly sales (in $’000s) for a shop.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

60 56 75 78

Use the data determine the seasonal indices for the four quarters. Give your results
correct to two decimal places. Check that your seasonal indices add to 4.

Example 11 16 The table below records the monthly sales (in $’000s) for a shop.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
12 13 14 17 18 15 9 10 8 11 15 20

Use the data to determine the seasonal indices for the 12 months. Give your results
correct to two decimal places. Check that your seasonal indices add to 12.

17 The table below records the monthly sales (in $’000s)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
22 19 25 23 20 18 20 15 14 11 23 30

Use the data to determine the seasonal indices for the 12 months. Give your results
correct to two decimal places. Check that your seasonal indices add to 12.

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 142 Chapter 3 ■ Time series analysis

3E Fitting a trend line and forecasting

▶▶Fitting a trend line
If there appears to be a linear trend, we can use the least squares method to fit a line to the
data to model the trend.

Example 14 Fitting a trend line

Fit a trend line to the data in the following table, which shows the total number of school
students in Queensland over the years 2008–2017. Interpret the slope.
Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Students 706 462 717 988 724 956 733 652 747 682 761 411 773 309 784 224 794 815 806 555

Solution
1 Construct a time 820 000
series plot of the
800 000
data to confirm
that the trend is 780 000
Students

linear. 760 000

740 000

720 000

700 000
2006 2008 2010 2012 2014 2016 2018
Year
2 Fit a least squares intercept = −22 024 760
regression trend slope = 11 319
line to the data Number of students = −22 024 760 + 11 319 × year
with Year as the
EV. Write down
its equation.
3 Interpret the The number of students at school in Queensland increased on average by
slope. 11 319 students per year.

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 3E Fitting a trend line and forecasting 143  

▶▶Forecasting
Using a trend line fitted to a time series plot to make predictions about future values is
known as trend line forecasting.

Example 15 Using a trend line to forecast a future value

Use the data and least squares regression trend line from Example 14. How many
­students do we predict will be attending school in Queensland in 2025 if the same
increasing trend continues? Give your answer correct to the nearest 10 000 students.
Solution
Substitute the appropriate Number of students = −22 024 760 + 11 319 × 2025
value for year in the equation = 896 215
­determined using the least ≅ 900 000
squares regression trend line.

▶▶Forecasting taking seasonality into account

When time series data is seasonal, it is usual to deseasonalise the data before fitting the
trend line.

Example 16 Fitting a trend line (seasonality)

The deseasonalised quarterly sales data from Mikki’s shop are shown below.

Quarter 1 2 3 4 5 6 7 8 9 10 11 12
Sales 893 943 955 858 1005 1026 1043 1040 1261 1151 1115 1267
Fit a trend line and interpret the slope.

Solution
1 Plot the time series. 1250
2 Using the calculator (with Quarter
as the EV and Sales as the RV), find
the equation of the least squares
Sales

regression trend line. Plot it on the 1000

time series.

750
0 1 2 3 4 5 6 7 8 9 10 11 12
Quarter
3 Write down the equation of the least Sales = 838.0 + 32.1 × quarter
squares regression trend line.
4 Interpret the slope in terms of the Over the 3-year period, sales at Mikki’s shop
variables involved. increased at an average rate of 32 sales per quarter.

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 144 Chapter 3 ■ Time series analysis

▶▶Making predictions with deseasonalised data

When using deseasonalised data to fit a trend line, you must remember that the result
of any prediction is a deseasonalised value. To be meaningful, this result must then be
reseasonalised by multiplying by the appropriate seasonal index.

Example 17 Forecasting (seasonality)

What sales do we predict for Mikki’s shop in the winter of the 4th year? (Because many
items have to be ordered well in advance, retailers often need to make such decisions.)

Solution
1 Substitute the appropriate value for the Sales = 838.0 + 32.1 × quarter
time period in the equation for the trend = 838.0 + 32.1 × 15
line. Since summer year 1 was ­designated = 1319.5
as quarter ‘1’, then winter year 4 is
Deseasonalised sales prediction for winter
­quarter ‘15’.
of year 4 = 1319.5
2 The value just calculated is the Seasonalised sales prediction for winter of
­deseasonalised sales figure for the quarter in year 4 = 1319.5 × 1.30
question. ≈ 1715
To obtain the actual predicted sales figure
we need to reseasonalise this predicted
value. To do this, we multiply this value by
the seasonal index for winter, which was
found to be 1.30 in Example 12.

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 3E 3E Fitting a trend line and forecasting 145  

Exercise 3E
Example 14 1 Consider the population of Australia over the period 2006–2017.

CF
Population of Australia 2006–2017
Year Population (1 000 000)
2017 24.5
2016 24.1
2015 23.8
2014 23.5
2013 23.1
2012 22.7
2011 22.3
2010 22.0
2009 21.7
2008 21.3
2007 20.8
2006 20.7

a Fit a least squares regression trend line to this data.

b Use this equation to predict the population of Australia in 2024.

Example 15 2 The table below shows the percentage of total retail sales that were made in
department stores over an 11-year period:

Year 1 2 3 4 5 6 7 8 9 10 11
Sales
12.3 12.0 11.7 11.5 11.0 10.5 10.6 10.7 10.4 10.0 9.4
(%)

a Construct a time series plot.

b Comment on the time series plot in terms of trend.
c Fit a least squares regression trend line to the time series plot, find its equation and
interpret the slope.(Give answer to three significant figures.)
d Draw the trend line on your time series plot.
e Use the least squares equation to forecast the percentage of retails sales which will
be made by department stores in year 15.

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 146 Chapter 3 ■ Time series analysis 3E

3 The data shows the number of students enrolled (in thousands) in university in
Australia for the period 2006–2016.

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number 733 757 772 814 857 886 932 985 1025 1047 1066

The time series plot of the data is shown below.

1100
1050
1000
950
900
Number

850
800
750
700
650
600
2004 2006 2008 2010 2012 2014 2016 2018
Year
a Comment on the plot.
b Fit a least squares regression trend line to the data. Interpret the slope.
c Use this equation to predict the number of university students in Australia in 2025.

Fitting a least squares regression trend line to a time series with seasonality
Example 16 4 a T
 he table below shows the deseasonalised quarterly washing-machine sales of a
company over 3 years. Use least squares regression to fit a trend line to the data.

Year 1 Year 2 Year 3

Quarter number 1 2 3 4 5 6 7 8 9 10 11 12
Deseasonalised 53 51 54 55 64 64 61 63 67 69 68 66

b Use this trend equation for washing-machine sales, with the seasonal indices
below, to forecast the sales of washing machines in the fourth quarter of year 4.

Quarter 1 2 3 4
Seasonal index 0.90 0.81 1.11 1.18

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 3E 3E Fitting a trend line and forecasting 147  

Example 17 5 The number of international visitors (in thousands) arriving in Australia each year
from 1996–2015 is given in the following table.

Year Number Year Number

1996 4165 2006 5532
1997 4318 2007 5644
1998 4167 2008 5586
1999 4459 2009 5490
2000 4931 2010 5790
2001 4856 2011 5771
2002 4841 2012 6032
2003 4746 2013 6382
2004 5215 2014 6868
2005 5499 2015 7444

a Fit a least squares regression trend line to the data.

b Use this trend line to predict the number of international visitors arriving in
Australia in 2030. Explain why this prediction may not be reliable.

6 The number of boogie boards sold by a surf shop over a two-year period is given in

CU
the table.

Year Quarter 1 Quarter 2 Quarter 3 Quarter 4

1 138 60 73 230
2 283 115 163 417

The quarterly seasonal indices are given below.

Seasonal index 1.13 0.47 0.62 1.77

a Use the seasonal indices to calculate the deseasonalised sales figures for this
period to the nearest whole number.
b Plot the actual sales figures and the deseasonalised sales figures for this period and
comment on the plot.
c Fit a least squares regression trend line to the deseasonalised sales data. Write the
slope and intercept correct to three significant figures.
d Use the relationship calculated in c, together with the seasonal indices, to forecast
the sales for the first quarter of year 4 (you will need to reseasonalise here).

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 148 Chapter 3 ■ Time series analysis

3F Conducting a statistical investigation involving

time series
We now have the tools to extend our statistical investigations to questions concerning time
series data.

Example 18 Conducting a statistical investigation involving time series

To help with forward planning a tourism authority wishes to examine the trends of overseas
visitors to Australia, specifically those whose primary reason for visiting Australia is for a
holiday. Conduct a statistical investigation and write a report on the findings.

Solution
Data for the number of overseas tourism arrivals can be accessed through the Australian
Bureau of Statistics website.
Data for the years 2011–2016 for those visitors who reported the primary purpose of
their visit as holidays is given in the table below.

Year 2011 2012 2013 2014 2015 2016

Holiday
2 632 300 2 782 900 2 984 700 3 202 000 3 496 900 4 249 800
visitors

A time series plot of the data is given below.

4 500 000
Number of visitors holidaying

4 000 000

3 500 000

3 000 000

2 500 000

2 000 000

1 500 000
2010 2011 2012 2013 2014 2015 2016 2017
Year

If a least squares regression line is fitted to the data, the following equation is obtained:
holiday visitors = −597 764 713 + 298 480 × year

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 3F Conducting a statistical investigation involving time series 149  

This model predicts that the number of overseas holiday visitors to Australia is increasing
by approximately 300 000 per year. The line is shown on the following plot:
4 500 000

4 000 000
Visitors holidays
3 500 000

3 000 000

2 500 000

2 000 000

1 500 000
2010 2011 2012 2013 2014 2015 2016 2017
Year

It also seems likely that the number of overseas holiday visitors to Australia might be
seasonal.
Using monthly arrival data for 2015 and 2016, the monthly seasonal indices can be ­calculated
by determining seasonal indices for each year separately then averaging to ­combine the
­information for the two years. These calculations are as shown in the following table.

Monthly visitors Seasonal indices

Month
2015 2016 2015 2016 Average
Jan 228 900 318 600 0.785 0.900 0.84
Feb 342 800 411 600 1.176 1.162 1.17
Mar 308 300 397 000 1.058 1.121 1.09
April 247 500 310 100 0.849 0.876 0.86
May 214 900 274 000 0.737 0.774 0.76
Jun 214 000 277 600 0.734 0.784 0.76
Jul 271 400 344 500 0.931 0.973 0.95
Aug 269 100 340 500 0.923 0.961 0.94
Sept 265 500 329 200 0.911 0.930 0.92
Oct 314 900 345 900 1.081 0.977 1.03
Nov 342 800 384 900 1.176 1.087 1.13
Dec 476 800 515 900 1.636 1.457 1.55

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 150 Chapter 3 ■ Time series analysis

We can use the previous analyses to write the following report.

Report
The number of overseas visitors to Australia in the years 2011–2016 who reported their
primary reason for visiting to be for a holiday was investigated. A time series plot showed an
increasing trend. A trend forecasting line fitted to the data using least squares regression has
the equation:
holiday visitors = −597 764 713 + 298 480 × year
This tell us that on average the number of visitors is increasing by approximately 300 000 per
year. Using this rule, we would forecast the number of overseas holiday visitors in 2017 to be
4 269 447. However, looking carefully at the plot we can see that there was a marked increased
in the number of visitors between 2015 and 2016, and we should be cautious with using the
least squares line for forecasting too far into the future.
The number of visitors also exhibited monthly seasonality. Based on monthly visitor data for
2014 and 2015, the following seasonal indices were determined:
Month Jan Feb Mar April May Jun Jul Aug Sept Oct Nov Dec
SI 0.84 1.17 1.09 0.86 0.76 0.76 0.95 0.94 0.92 1.03 1.13 1.55
Thus, we can say that the peak month for overseas holiday visitors is December, where we can
expect 55% more visitors than the average month, while the least popular months for overseas
holiday visitors are May and June, both recording 24% less visitors than the average month.

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 3F 3F Conducting a statistical investigation involving time series 151  

Exercise 3F
Example 18 1 The table below gives the number of births in Australia (‘000s), quarterly from

CU
March 2011.

Q1 Q2 Q3 Q4
2011 76.0 76.3 76.2 74.2
2012 78.1 77.5 78.7 77.9
2013 77.4 77.1 76.9 75.7
2014 77.5 76.9 79.0 77.1
2015 76.2 75.4 78.8 75.9
2016 78.8 78.2 75.7 70.7
a Construct a time series plot and comment on its features.
b Construct a table of the centred four-point moving averages of the number of
births in Australia. Superimpose the moving average on the time series plot of the
data. Comment on what this graph shows and why a four-point moving average
has been recommended.
c Select data for three years and use it to calculate seasonal indices for birth rate.
d Discuss in a few sentences what these seasonal indices tell you about the seasonal
pattern of the number of births in Australia.
e Determine the equation of the least squares regression line for the data. Interpret
the intercept and slope of the regression line in terms of number of births and time,
and use the equation to predict the number of births in Q3 in 2020.

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 152 Chapter 3 ■ Time series analysis 3F

2 The tables below relate to the number of people in Queensland who are employed and
unemployed.
a The table below gives the number of people in Queensland who are employed, by
month from Jan 2013 to December 2017.

Year
Employed
2013 2014 2015 2016 2017
(‘000s)
Jan 2276.0 2259.8 2282.5 2356.7 2327.8
Feb 2281.7 2312.5 2340.6 2396.8 2360.0
March 2282.8 2333.9 2313.6 2358.0 2374.6
April 2291.7 2340.9 2326.4 2361.9 2397.9
May 2294.3 2342.6 2351.1 2361.8 2407.5
June 2289.6 2340.6 2345.3 2352.7 2400.1
July 2312.2 2334.7 2339.2 2365.0 2431.9
Aug 2286.4 2339.2 2338.1 2342.7 2439.6
Sept 2338.6 2321.6 2359.6 2341.3 2440.0
Oct 2330.0 2318.6 2385.0 2338.5 2469.1
Nov 2321.2 2308.6 2381.1 2373.3 2468.8
Dec 2326.1 2345.5 2404.7 2377.3 2479.2

i Construct a times series plot of employment and comment on its features.

ii Select data for two years and use it to calculate seasonal indices for employment.
iii Discuss in a few sentences what these seasonal indices tell you about the
employment pattern in Queensland.
iv Use the seasonal indices to compute deseasonalised data. Use the
deseasonalised data to produce a time series plot of employment against time,
and comment on the plot.
v Determine the equation of the least squares regression line for the
deseasonalised data. Interpret the intercept and slope of the regression line in
terms of employment and time.

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 3F 3F Conducting a statistical investigation involving time series 153  

b The table below gives the number of people in Queensland who are unemployed,
by month from Jan 2013 to December 2017.

Year
Unemployed
2013 2014 2015 2016 2017
(‘000s)
Jan 145.2 159.0 169.3 173.7 165.6
Feb 165.2 181.2 186.5 158.1 191.3
March 157.5 166.8 178.9 169.2 173.7
April 131.0 151.7 160.0 161.3 159.7
May 140.8 153.1 154.6 157.9 153.9
June 149.8 153.7 146.1 157.2 164.6
July 132.8 159.6 154.8 146.5 153.3
Aug 134.7 159.7 156.1 151.9 144.8
Sept 144.6 154.4 152.6 151.1 146.9
Oct 136.7 167.6 148.2 135.7 144.7
Nov 127.4 153.5 134.9 134.5 135.8
Dec 144.7 148.7 140.4 145.1 147.1

i Construct a times series plot of unemployment and comment on its features.

ii Select data for two years and use it to calculate seasonal indices for
unemployment.
iii Discuss in a few sentences what these seasonal indices tell you about the
unemployment pattern in Queensland.
iv Use the seasonal indices to compute deseasonalised data. Use the
deseasonalised data to produce a time series plot of unemployment against
time, and comment on the plot.
v Determine the equation of the least squares regression line for the
deseasonalised data. Interpret the intercept and slope of the regression line in
terms of unemployment and time.
c Does there seem to be any association between employment and unemployment
numbers in Queensland?

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 154 Chapter 3 ■ Time series analysis
Review

Key ideas and chapter summary

Time series data Time series data are a collection of data values along with the times
AS (in order) at which they were recorded.

Time series plot A time series plot is a line graph where the values of the response
­variable are plotted in time order.

Features to look ■■Trend

for in a time ■■Cycles
series plot
■■Seasonality
■■Structural change
■■Possible outliers
■■Irregular (random) fluctuations
Trend Trend is present when there is a long-term upward or downward
­movement in a time series.

Cycles Cycles are present when there is a periodic movement in a time series.
The period is the time it takes for one complete up and down ­movement
in the time series plot. This term is generally reserved for periodic
­movements with a period greater than one year.

Seasonality Seasonality is present when there is a periodic movement in a time series

that has a calendar related period, for example, a year, a month, a week.

Structural Structural change is present when there is a sudden change in the

change established pattern of a time series plot.

Outliers Outliers are present when there are individual values that stand out from
the general body of data.

Irregular Irregular (random) fluctuations are always present in any real-world

(random) time series plot. They include all of the variations in a time series that
­fluctuations we cannot reasonably attribute to systematic changes like trend, cycles,
seasonality, structural change or the presence of outliers.

Smoothing Smoothing is a technique used to eliminate some of the irregular

­fluctuations in a time series plot so that features such as trend are
more easily seen.

Moving mean In moving mean smoothing, each original data value is replaced by
smoothing the mean of itself and a number of data values on either side. When
­smoothing over an even number of data points, centring is required to
ensure the smoothed mean is centred on the chosen point of time.

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 Chapter 3 Review 155  

Review
Seasonal Seasonal indices are used to quantify the seasonal variation in a time
­indices series.

Deseasonalise The process of accounting for the effects of seasonality in a time series
is called deseasonalisation.

Reseasonalise The process of a converting seasonal data back into its original form is
called reseasonalisation.

Trend line Trend line forecasting uses the equation of a trend line to make
­forecasting ­predictions about the future.

Skills check
Having completed this chapter you should be able to:

■■ recognise time series data

■■ construct a times series plot
■■ identify the presence of trend, cycles, seasonality, structural change and irregular
(random) fluctuations in a time series plot
■■ smooth a time series to help identify any trend
■■ calculate and interpret seasonal indices
■■ calculate and interpret a trend line for linear trends
■■ use a trend line to make forecasts.

Multiple-choice questions
1 The pattern in the time series in the graph shown is best described as:
A trend
B cyclical but not seasonal
C seasonal
D irregular
E average

1 2 3 4 5 6 7 8
Quarter

Use the following table to answer Questions 2 to 5.

Time period 1 2 3 4 5 6
Data value 2.3 3.4 4.4 2.7 5.1 3.7

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 156 Chapter 3 ■ Time series analysis
Review

2 The three-moving mean for time period 2 is closest to:

A 3.4 B 3.6 C 3.9 D 4.0 E 4.2

3 The five-moving mean for time period 3 is closest to:

A 3.4 B 3.6 C 3.9 D 4.1 E 4.2

4 The two-moving mean for time period 5 with centring is closest to:
A 2.7 B 3.6 C 3.9 D 4.0 E 4.2

5 The four-moving mean for time period 4 with centring is closest to:
A 2.7 B 3.6 C 3.9 D 4.1 E 4.2

6 The seasonal indices for the number of customers at a restaurant are as follows.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1.0 p 1.1 0.9 1.0 1.0 1.2 1.1 1.1 1.1 1.0 0.7

The value of p is:

A 0.5 B 0.7 C 0.8 D 1.0 E 1.2
Use the following information to answer Questions 7–10.
The seasonal indices for the number of bathing suits sold at a surf shop are given in the table.

Quarter Summer Autumn Winter Spring

Seasonal index 1.8 0.4 0.3 1.5

7 The number of bathing suits sold one summer is 432. The deseasonalised number is
closest to:
A 432 B 240 C 778 D 540 E 346

8 The deseasonalised number of bathing suits sold one winter was 380. The actual
number was closest to:
A 114 B 133 C 152 D 380 E 1267

9 The seasonal index for spring tells us that, over time, the number of bathing suits sold
in spring tends to be:
A 50% less than the seasonal average
B 15% less than the seasonal average
C the same as the seasonal average
D 15% more than the seasonal average
E 50% more than the seasonal average

10 To correct for seasonality, the actual number of bathing suits sold in Autumn
should be:
A reduced by 60% B reduced by 40% C increased by 40%
D increased by 60% E increased by 150%

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 Chapter 3 Review 157  

Review
11 The number of visitors to an information centre each quarter was recorded for one
year. The results are tabulated below.

Quarter Summer Autumn Winter Spring

Visitors 1048 677 593 998

Using this data, the seasonal index for autumn is estimated to be closest to:
A 0.25 B 1.0 C 1.23 D 0.82 E 0.21
Use the following information to answer Questions 12 and 13.
A trend line is fitted to a time series plot displaying the average age at marriage of males (in
years) for the period 2005–2016.
The equation of this line is: age = 31.1 + 0.236 × year
Here year 1 is 2005, year 2 is 2006, and so on.

12 Using this trend line, the average age of marriage of males in 2020 is forecasted to be:
A 31.3 B 34.6 C 34.9 D 35.1 E 500.0

13 From the slope of the trend line it can be said that:

A on average, the age of marriage for males is increasing by about 3 months per year
B on average, the age of marriage for males is decreasing by about 3 months per year
C older males are more likely to marry than younger males
D no males married at an age younger than 27 years
E on average, the age of marriage for males is increasing by 0.236 months per year
Use the following information to answer Questions 14 and 15.
Suppose that the seasonal indices for the wholesale price of petrol are:

Day Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Index 1.2 1.0 0.9 0.8 0.7 1.2 1.2
The daily deseasonalised prices for a petrol outlet for a week (in cents/litre) are given in the
following table.

Day Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Price 88.3 85.4 86.7 88.5 90.1 91.7 94.6

14 The equation of the least squares regression line that could enable us to predict the
deseasonalised price is closest to:
A price = 84.3 + 1.25 × day
B price = −49.7 + 0.601 × day
C price = 1.25 + 84.3 × day
D price = 0.601 − 49.7 × day
E price = 84.3 − 1.25 × day

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 158 Chapter 3 ■ Time series analysis
Review

15 The seven-mean deseasonalised smoothed price of petrol (in cents/litre) for this week
was closest to:
A 87.4 B 88.3 C 88.5 D 89.3 E 90.0

16 The deseasonalised price (in cents/litre) on Thursday was 90.1. The actual price on
Thursday was closest to:
A 63.1 B 75.6 C 110.8 D 128.7 E 135.4

Short-answer questions
1 Construct a time series plot to display the following data:

SF
Year 2013 2014 2015 2016 2017 2018 2019 2020
Sales 12 15 35 23 67 56 78 70

2 Briefly explain the concepts of trend, seasonality, and cycles in a time-series plot.

CF
3 The time series plot below shows house sales per year in a certain town over a 12-year
period.

250

225

200
Sales

175

150

125

2008 2010 2012 2014 2016 2018 2020

Year
Describe the features of the plot.

4 What is the purpose of smoothing?

SF

5 The following table shows the maximum daily temperature in a certain town over a
one-week period:

Day Mon Tues Wed Thu Fri Sat Sun

Temp (°C) 20 21 26 36 34 42 26

a Determine the three mean smoothed temperature for Tuesday.

b Determine the five mean smoothed temperature for Friday.

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 Chapter 3 Review 159  

Review
Questions 6 & 7 refer to the following information.
The value of an Australian dollar in US dollars (exchange rate) over a 10-day period is
given in the table.

Day 1 2 3 4 5 6 7 8 9 10
Exchange 0.7183 0.7146 0.7093 0.7095 0.7076 0.7035 0.7049 0.7009 0.7044 0.7069
rate

6 Determine the centred two mean smoothed value for Day 5.

CF
7 Determine the centred four mean smoothed value for Day 6.

8 The seasonal index for sales in December in a retail shop is 1.25. If the actual sales

SF
last December were recorded as 2768, what is the deseasonalised sales figure?

9 The seasonal indices for the daily sales in an ice-cream shop are as follows:

CF
Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Seasonal index 0.55 0.50 0.58 0.64 1.0 ? 1.87

a What is the seasonal index for Saturday?

b Interpret this index in terms of the average daily sales for this shop.

10 The number of staff employed by a restaurant chain in each quarter of one year is

SF
given in the following table.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Number of staff 35 98 65 23

Use these data to calculate quarterly seasonal indices for the number of staff employed
by the restaurant chain.

11 The number of international visitors (in thousands)

CF
Year 000’s of visitors
arriving in a certain country each year from
2014 6490
2014–2020 is given in the following table.
2015 6790
a Fit a least squares trend line to the data.
2016 6771
b Use this to predict the number of visitors in 2025.
Explain why this prediction may be unreliable. 2017 7032
2018 7382
2019 7868
2020 8244

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 160 Chapter 3 ■ Time series analysis
Review

12 The number of people arriving at a certain station each day is seasonal, with seasonal
indices as shown below:

Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Seasonal index 1.32 1.20 0.95 0.95 1.48 0.65 0.45

It is also known that over a specific time period the number of travellers each day has
generally been increasing, according to the following equation which was determined
from deseasonalised data:

number of travellers = 135 + 22.5 × day

If a certain Saturday is designated as Day 1, how many travellers would you predict
for the following Saturday?

Extended-response questions
1 Gross Domestic Product per capita (GDP per capita) is a measure of the economic

CU
performance of a country. The following table shows the Australian GDP per capita
for the 12 years from 2005–2016.

Year GDP per capita ($US)

2005 36 179
2006 37 908
2007 45 163
2008 49 224
2009 45 604
2010 56 360
2011 66 773
2012 68 048
2013 64 734
2014 61 232
2015 51 220
2016 51 737

a Construct a time series plot of the data.

b Briefly describe the pattern in the data.
c Find the equation of the least squares regression line that would enable GDP per
capital to be predicted from year to year.
d In 2017 the GDP per capital of Australia was $US56 135. Find the error in the prediction
if the least squares regression line in c is used to predict the GDP per capita in 2017.

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 Chapter 3 Review 161  

Review
2 The table below shows the rainfall (in mm) for each month in a region near Cairns in
2015 and 2016:
2015 2016
Jan 251.2 129.4
Feb 605.0 125.2
Mar 280.2 283
Apr 128.1 187.3
May 56.3 178.4
Jun 243.1 108.6
Jul 26.9 99.0
Aug 22.6 47.3
Sept 29.1 55.5
Oct 57.3 56
Nov 131.5 26.5
Dec 420.4 89.1

a Construct a time series plot for the rainfall in 2015.

b Use three-mean smoothing to smooth the time series. Plot the smoothed time series
for 2015 on the plot. Describe the general pattern of the rainfall for 2015.
c Construct a time series plot for the rainfall in 2016.
d Use three-mean smoothing to smooth the time series. Plot the smoothed time series
for 2016 on the plot. Describe the general pattern in rainfall for 2016.
e Compare the rainfall patterns in 2015 and 2016, identifying similarities and
differences.

3 The table below shows the average interest rate for the period 1987–97. Also shown
are the three-mean smoothed average rates but with one missing.

Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Average
15.50 13.50 17.00 16.50 13.00 10.50 9.50 8.75 10.50 8.75 7.55
rate (%)
Three-
15.33 15.67 15.50 13.33 9.58 9.58 9.33 8.93
mean (%)

a Complete the table by showing that the three-mean smoothed interest rate for 1992
is 11.0%.
b Construct a time series plot for the average interest rate during the period 1987–97.
c Plot the smoothed interest rate data on the graph and comment on any trend.

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 4
Chapter 4

Arithmetic and geometric

sequences

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 3 Growth and decay in sequences

▶▶ How do we identify a sequence?

▶▶ How do we generate a sequence?
▶▶ How do we define a recurrence relation in a sequence?
▶▶ How do we calculate a certain term in a sequence?
▶▶ How do we use sequences to determine the value of items
depreciating?
▶▶ How do we use sequences to determine the value of loans and
investments?

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 4A Sequences and simple recursion 163  

4A Sequences and simple recursion

▶▶Sequences
A list of numbers, written down in succession, is called a sequence. Each of the numbers
in a sequence is called a term. We write the terms of a sequence as a list, separated by
commas. If a sequence continues indefinitely, or if there are too many terms in the sequence
to write them all, we use an ellipsis ‘…’ at the end of a few terms of the sequence like this:
12, 22, 5, 6, 16, 43, …

The terms in this sequence of numbers could be the ages of the people boarding a plane.
The ages of these people is random, so this sequence of numbers is called a random
sequence. There is no pattern or rule that allows the next number in the sequence to be
predicted.
Some sequences of numbers do display a pattern. For example, this sequence:
1, 3, 5, 7, 9, …

has a definite pattern and so this sequence is said to be rule-based. The sequence of numbers
has a starting value, which is 1. We add 2 to this number to generate the term 3. Then, add 2
again to generate the term 5, and so on. The rule is ‘add 2 to each term’.
+2 +2 +2 +2

1 3 5 7 9 . . .

▶▶Recursion
In the following two examples we generate a sequence of terms by recursion. A simple
definition of recursion is that from a given starting point the sequence is built up term by
term always moving from one term to the next by applying the same rule.
In the sequence 1, 3, 5, 7, 9, …, the starting point was 1 and the rule was ‘add 2’.

Example 1 Generating a sequence by recursion (by adding)

Write down the first five terms of the sequence with a starting value of 6 and the rule
‘add 4’.
Solution
1 Write down the starting value. 6
2 Apply the rule (add 4) to generate the 6 + 4 = 10
next term.
3 Calculate three more terms. 10 + 4 = 14, 14 + 4 = 18, 18 + 4 = 22
4 Write your answer. 6, 10, 14, 18, 22

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 164 Chapter 4 ■ Arithmetic and geometric sequences

Example 2 Generating a sequence by recursion (by multiplying)

Write down the first five terms of the sequence with a starting value of 3 and the rule
‘multiply by 4’.
Solution
1 Write down the starting value. 3
2 Apply the rule (multiply by 4) to 3 × 4 = 12
generate the next term.
3 Calculate three more terms. 12 × 4 = 48, 48 × 4 = 192, 192 × 4 = 768
4 Write your answer. 3, 12, 48, 192, 768

▶▶Using a calculator to generate a sequence of numbers

by recursion
A calculator can perform recursive calculations very easily, because it automatically stores
the answer to the last calculation it performed, as well as the method of calculation. The
way it does this depends on the calculator you are using.

Example 3 Generating sequences of numbers from a rule using a calculator

Use a calculator to generate the first five terms of the sequence with a starting value of
5 and the rule ‘double and then subtract 3’.
Solution
1 Press clear (Casio scientific calculators) or
|
clear (TI scientific calculators) to create a blank
0
­computation screen.
2 Type 5 and then press = (Casio) or enter (TI).
5
This stores the starting value of the sequence in
5
the calculator memory.
3 Next, type × 2 − 3 and then press = (Casio) or
Ans × 2 − 3
enter (TI). The second term of the sequence will
7
be calculated and displayed on the screen.

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 4A 4A Sequences and simple recursion 165  

4 Press = (Casio) or enter (TI) repeatedly to apply Pressing ‘=’ or enter 1 more time
the sequence rule to the previous ­calculated term.
Ans × 2 − 3
11
Note: The screen will show the calculation as Pressing ‘=’ or enter another time
‘Ans × 2 − 3’ where ‘Ans’ is the previously calculated
term value. Ans × 2 − 3
19

5 Write down the sequence terms as they are The sequence is 5, 7, 11, 19, 35, …
­calculated.

Exercise 4A
Generating a sequence by recursion
Example 1, 2 1 Use the following starting values and rules to generate the first five terms of the

SF
following sequences recursively by hand.
a Starting value: 2, rule: add 6
b Starting value: 5, rule: subtract 3
c Starting value: 10, rule: divide by 2
d Starting value: 6, rule: multiply by 2

Generating a sequence by recursion using a calculator

Example 3 2 Use the following starting values and rules to generate the first five terms of the
following sequences recursively using a calculator.
a Starting value: 4, rule: add 2
b Starting value: 50, rule: divide by 5
c Starting value: 24, rule: subtract 4
d Starting value: 5, rule: multiply by 3
e Starting value: 2, rule: multiply by 5

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 166 Chapter 4 ■ Arithmetic and geometric sequences

4B Defining an arithmetic sequence by recursion

A sequence in which each successive term can be found by adding the same number
to the previous term is called an arithmetic sequence. For example, the sequence
2, 7, 12, 17, 22, … is arithmetic because each successive term can be found by adding 5.

term 1 term 2 term 3 term 4 term 5

2 7 12 17 22

+5 +5 +5 +5 +5

The sequence 19, 17, 15, 13, 11, … is also arithmetic because each successive term can be
found by adding −2.

term 1 term 2 term 3 term 4 term 5

19 17 15 13 11

−2 −2 −2 −2 −2

▶▶The common difference

Because of the way in which an arithmetic sequence is formed, the difference between
successive terms is constant. We call this difference the common difference. In the sequence:
2, 7, 12, 17, 22, …

the common difference is +5 , while in the sequence:

19, 17, 15, 13, 11, …

the common difference is −2.

▶▶Method of recursion to generate an arithmetic sequence

Method for using recursion to generate an arithmetic sequence
The method for using recursion to generate an arithmetic sequence has two parts:
1 A starting point, the value of the first term t1 = a of the sequence
2 Successively adding the common difference d to each term to obtain the next term.
This will generate the sequence.

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 4B Defining an arithmetic sequence by recursion 167  

For example, in words, a rule for the recursion that can be used to generate the sequence:
10, 15, 20, 25, …
can be written as follows:
1 Start with 10.
2 To obtain the next term, add 5 to the current term and repeat the process.
A more compact way of communicating this information is to translate this rule into
symbolic form. We do this in the following way.

■■t1 is the first term of a sequence

■■t2 is the second term of a sequence
■■t3 is the third term of a sequence
and so on. tn is the nth term of the sequence.
Here we have used tn, but the t can be replaced by any letter of the alphabet.
For example, for the sequence 10, 15, 20, 25, …
t1 = 10, t2 = 15, t3 = 20, t4 = 25

This notation gives us a way to describe the generation of an arithmetic sequence by

recursion.

t1 = a and tn+1 = tn + d, where d is the common difference.

We call this a recurrence relation.

Note: This also gives us a way to test whether a sequence is arithmetic or not.

We must have:
tn+1 − tn = d

for all whole numbers n ⩾ 1.

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 168 Chapter 4 ■ Arithmetic and geometric sequences

Example 4 Generating an arithmetic sequence with a recurrence relation

An arithmetic sequence is defined by the recurrence relation:
t1 = 9, tn+1 = tn − 4
Find the first five terms.
Solution
1 We start with the first term t1 = 9. t1 = 9
2 Subtract 4 each time to generate the t 2 = t1 − 4 = 9 − 4 = 5
sequence. t 3 = t2 − 4 = 5 − 4 = 1
t4 = t3 − 4 = 1 − 4 = −3
t5 = t4 − 4 = −3 − 4 = −7

▶▶Graphing an arithmetic sequence

Consider the arithmetic sequences defined by:

■■P1 = 22, Pn+1 = Pn + 2 (Sequence 1)

■■Q1 = 18, Qn+1 = Qn − 2 (Sequence 2)
The first generates the arithmetic sequence 22, 24, 26, …
It is an increasing sequence.
The second generates the arithmetic sequence 18, 16, 14, …
It is a decreasing sequence.

Sequence 1
The first few values of the sequence can be shown in a table.
The first five values of Sequence 1 are shown in the table:
n 1 2 3 4 5
Pn P1 = 22 P2 = 24 P3 = 26 P4 = 28 P5 = 30

and this gives ordered pairs (1, 22), (2, 24), Pn

(3, 26), (4, 28), (5, 30).
30
These can be graphed as shown opposite.
25
20
15
10
5
n
O 1 2 3 4 5

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 4B Defining an arithmetic sequence by recursion 169  

Sequence 2
The first five values of Sequence 2 are shown in the table:

n 1 2 3 4 5
Qn Q1 = 18 Q2 = 16 Q3 = 14 Q4 = 12 Q5 = 10

and this gives ordered pairs Qn

(1, 18), (2, 16), (3, 14), (4, 12), (5, 10). 50
These can be graphed as shown opposite. 40
30
20
10
n
O 1 2 3 4 5
The graphs below display the terms in four different arithmetic sequences:
Sequence 1: t1 = a = 2, d = 2, n = 1, 2, 3, …
Sequence 2: t1 = a = 2, d = 5, n = 1, 2, 3, …
Sequence 3: t1 = a = 22, d = −2, n = 1, 2, 3, …
Sequence 4: t1 = a = 22, d = −5, n = 1, 2, 3, …
tn tn
25 25
Sequence 2 Sequence 3
20 a = 2, d = 5 20 a = 22, d = −2
15 15
10 10
Sequence 4
5 Sequence 1 5 a = 22, d = −5
a = 2, d = 2
n n
O 1 2 3 4 5 O 1 2 3 4 5

▶▶Linear growth and decay

The key characteristics to note from the graphs above:

■■The points in the graphs are collinear; that is, the points lie on a straight line.
■■If the common difference, d, is positive, the terms in the sequence increase. The bigger
the value of d, the more rapid the increase. An arithmetic sequence with a positive
common difference can be used to model linear growth.
■■ If the common difference, d, is negative, the terms in the sequence decrease. The bigger
the absolute value of d, the more rapid the decrease. An arithmetic sequence with a
negative common difference can be used to model linear decay.

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 170 Chapter 4 ■ Arithmetic and geometric sequences 4A

Example 5 Graphing arithmetic sequences

Prepare a table of values and plot a graph to illustrate the first five terms of the sequence
defined by
t1 = 9, tn+1 = tn − 4

Solution
1 Generate the table from the
n 1 2 3 4 5
­recurrence relation by subtracting 4
from a term to give the next term. tn 9 5 1 -3 -7
2 Plot the ordered pairs
tn
(1, 9), (2, 5), (3, 1), (4, −3)
and (5, −7).
9

1
O n
1 2 3 4 5
-3

-7

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 4B 4B Defining an arithmetic sequence by recursion 171  

Exercise 4B
Generating an arithmetic sequence with a recurrence relation
Example 4 1 An arithmetic sequence is defined by:

SF
t1 = 3, tn+1 = tn + 4
Find the first five terms.
2 An arithmetic sequence is defined by:
t1 = 15, tn+1 = tn − 4
Find the first five terms.
3 Consider the arithmetic sequence 20, 24, 28, 32, 36, …
a What is the common difference?
b What is the next term in the sequence?
c Starting with 20, how many times do you have to add the common difference to
get to term 8? What is the value of term 8?
d Starting with 20, how many times do you have to add the common difference to
get to term 13? What is the value of term 13?
4 Consider the arithmetic sequence 5, 3, 1, −1, −3, …
a What is the common difference?
b What is the next term in the sequence?
c Starting with 5, how many times do you have to add the common difference to
get to term 7? What is the value of term 7?
d What is the value of term 10? What is the value of term 50?

Graphing arithmetic sequences

Example 5 5 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 9, tn+1 = tn − 4
6 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 10, tn+1 = tn + 5
7 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 12, tn+1 = tn − 2
8 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 12, tn+1 = tn − 4
9 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
s0 = 12, sn+1 = sn + 3

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 172 Chapter 4 ■ Arithmetic and geometric sequences

4C A general rule for finding the nth term of an arithmetic

sequence
The first term t1 of an arithmetic sequence is often denoted by a.
In the sequence 2, 7, 12, 17, 22, …
t1 = a = 2

We use the symbol d to represent the common difference.

In the sequence 2, 7, 12, 17, 22, …
d=5

▶▶The rule for the nth term of an arithmetic sequence

Consider an arithmetic sequence with first term a and common difference d.
Then:
t1 = a
t2 = t1 + d = a + d
t3 = t2 + d = a + 2d
t4 = t3 + d = a + 3d
t5 = t4 + d = a + 4d
t6 = t5 + d = a + 5d
and so on.
Thus, following the pattern, we can write:

The rule for the nth term of an arithmetic sequence

tn = a + (n − 1)d or tn = t1 + (n − 1)d
which gives us a rule for finding the nth term of an arithmetic sequence in terms of the
first term t1 = a and the common difference d.

Example 6 Using the rule for an arithmetic sequence (positive difference)

The first term of an arithmetic sequence is a = 6 and the common difference is d = 2.
Use a rule to determine the value of the 1lth term.

Solution
Substitute a = 6, d = 2 and n = 11 in the t11 = 6 + (11 − 1)2
rule tn = a + (n − 1)d. = 6 + 10 × 2
= 26

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 4C A general rule for finding the nth term of an arithmetic sequence 173  

Example 7 Using the rule for an arithmetic sequence (negative difference)

Use a rule to determine the value of the 15th term of the arithmetic sequence
18, 15, 12, 9, …

Solution
Substitute a = 18, d = –3 and n = 15 in the t15 = 18 + (15 − 1)(−3)
rule tn = a + (n − 1)d. = 18 + 14 × (−3)
= −24

Example 8 Determining an arithmetic sequence given two terms

In an arithmetic sequence, the fifth term is 10 and the ninth term is 18. Write down the
first three terms of the sequence.

Solution
1 t5 = 10, substituting in tn = a + (n − 1)d 10 = a + 4d  (1)
t9 = 18, substituting in tn = a + (n − 1)d 18 = a + 8d  (2)
2 We can now find a and d by solving
equations (1) and (2).
Subtract (1) from (2). 8 = 4d
so d = 2
3 Substitute d = 2 in equation (1). 10 = a + 4 × 2
=a+8
∴ a=2
The first three terms of the sequence are
2, 4, 6.

Example 9 Determining how many terms of an arithmetic sequence are required

to reach a particular number

How many terms would we have to write down in the arithmetic sequence
10, 14, 18, 22, … before we found a term greater than 50?

Solution
We want to find n so that: Solving for n we have:
tn = 10 + (n − 1) × 4 > 50 10 + (n − 1) × 4 > 50
t11 = 50, so the first term to exceed 50 is t12.
(n − 1) × 4 > 40
(n − 1) > 10
n > 11
The first term to exceed 50 is t12.

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 174 Chapter 4 ■ Arithmetic and geometric sequences

▶▶Graphing an arithmetic sequence

If we use the rule for finding the nth term of an arithmetic sequence, we understand a little
more about the graphs of arithmetic sequences. We will work with the rule for which the
first term is t1 = a.
tn = a + (n − 1)d
When a = 4 and d = –3
tn = 4 + (n − 1)(–3)
= −3n + 7

When we plot the graph of tn against n, the points lie on a straight line. This line has
gradient −3. Of course, we do not join these points with this line.

Example 10 Graphing an arithmetic sequence using a rule

Consider the arithmetic sequence with t1 = 2 and d = 3.

a Find the rule for this arithmetic sequence.
b Prepare a table of values for the sequence for n = 1 to n = 5.
c Plot a graph from the table of values.

Solution
a Substitute in tn = a + (n − 1)d. tn = 2 + (n − 1) × 3 for n = 1, 2, 3, …
= 3n − 1
b Use the rule to generate the
n 1 2 3 4 5
values of the table. For example,
t4 = 3 × 4 − 1 = 11 tn 2 5 8 11 14
c Plot the ordered pairs tn
(1, 2), (2, 5), …
15

10

O n
1 2 3 4 5

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 4C 4C A general rule for finding the nth term of an arithmetic sequence 175  

Exercise 4C
Using the rule for an arithmetic sequence
Example 6 1 The first term of an arithmetic sequence is a = 200 and the common difference is

SF
d = 10. Use this rule to determine the value of:
a the third term
b the 10th term
c the 151st term

2 An arithmetic sequence can be described by the recurrence relation

t1 = 6, tn+1 = tn + 7. Write down the rule for the nth term.

3 An arithmetic sequence can be described through the recurrence relation

t1 = 48, tn+1 = tn − 11. Write down the rule for the nth term.

4 An arithmetic sequence can be described through the recurrence relation

t1 = 8, tn+1 = tn + 11. Write down the rule for the nth term.

5 An arithmetic sequence can be described through the recurrence relation

t1 = 1000, tn+1 = tn − 20. Write down the rule for the nth term.

6 Use the rule for the nth term of an arithmetic sequence with t1 = a to determine the
value of:
a the 11th term of the arithmetic sequence 5, 10, 15, 20, 25, …
b the 8th term of the arithmetic sequence 12, 8, 4, 0, …
Example 7 c the 27th term of the arithmetic sequence 0.1, 0.11, 0.12, 0.13, …
d the 13th term of the arithmetic sequence −55, −42, −29, −16, …
e the 10th term of the arithmetic sequence −1.0, −1.5, −2.0, −2.5, …
f the 95th term of the arithmetic sequence 130, 123, 116, 109, …
1 1 1
g the 7th term of the arithmetic sequence , , 0, − , …
2 4 4

Determining an arithmetic sequence given two terms

Example 8 7 The first term of an arithmetic sequence is 6 and t8 = 34. Determine the common
difference.

8 The common difference for an arithmetic sequence is 20 and t10 = 188. Determine
the first term.

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 176 Chapter 4 ■ Arithmetic and geometric sequences 4C

9 Write down the first three terms (starting with t1) of the arithmetic sequences in

CF
which:
a the seventh term is 37 and the ninth term is 47
b the 11th term is 31 and the 15th term is 43
c the sixth term is 0 and the 11th term is −20
d the eighth term is 134 and the 13th term is 159
e the sixth term is 0 and the 10th term is −16
f the seventh term is 60 and the 12th term is 10
g the 10th term is 20 and the 21st term is 75

Determining how many terms of an arithmetic sequence are required to

reach a particular number
Example 9 10 How many terms would we have to write down in the arithmetic sequence:
a 5, 7, 9, 11, … before we found a term greater than 25?
b 132, 182, 232, 282, … before we found a term greater than 1000?
c 100, 96, 92, 88, … before we found a term less than 71?
d 10, 16, 22, 28, … before we found a term equal to 52?
e 0.33, 0.66, 0.99, 1.32, … before we found a term greater than 2?
f −17, −15, −13, −11, … before we found a positive term?
g 127, 122, 117, 112, … before we found a term less than zero?

Graphing an arithmetic sequence using a rule

11 Plot the first five terms of each of the following arithmetic sequences:

SF
a Sequence A: t1 = a = 3, d = 2, n = 1, 2, 3, …
b Sequence B: t1 = a = 12, d = −2, n = 1, 2, 3, …
c Sequence C: t1 = a = 0, d = 4, n = 1, 2, 3, …
d Sequence D: t1 = a = −6, d = 3, n = 1, 2, 3, …
e Sequence E: t1 = a = 10, d = −5, n = 1, 2, 3, …

12 Four sequences are displayed in the following graphs. For each sequence determine
the value of the first term, a, the common difference, d, and an expression for the nth
term, tn, in terms of n.
tn tn
25 Sequence A 25
20 20 Sequence C
15 15

10 10
Sequence D
5 Sequence B 5

n n
O 1 2 3 4 5 O 1 2 3 4 5
   

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 4C 4C A general rule for finding the nth term of an arithmetic sequence 177  

13 In an arithmetic sequence, the fifth term is 10 and the ninth term is 18.

CF
a Write down the rule for the arithmetic sequence.
b Write down the first 4 terms of the sequence.

14 In an arithmetic sequence, the second term is 17 and the ninth term is 59.
a Write down the rule for the arithmetic sequence.
b Write down the first 4 terms of the sequence.

15 In an arithmetic sequence, the eighth term is 35 and the twelfth term is 23.
a Write down the rule for the arithmetic sequence.
b Write down the first 4 terms of the sequence.

Example 10 16 Consider the arithmetic sequence with t1 = 5 and d = 2.

SF
a Find the rule for this arithmetic sequence.
b Prepare a table of values for the sequence from n = 1 to n = 5.
c Plot a graph of the sequence from the table of values.

17 Consider the arithmetic sequence with t1 = 20 and d = –4.

a Find the rule for this arithmetic sequence.
b Prepare a table of values for the sequence from n = 1 to n = 5.
c Plot a graph of the sequence from the table of values.

18 Consider the arithmetic sequence with t1 = 10 and d = 2.

a Find the rule for this arithmetic sequence.
b Prepare a table of values for the sequence from n = 1 to n = 5.
c Plot a graph of the sequence from the table of values.

19 An arithmetic sequence has rule tn = 5n + 2. Find t1 and the common difference d.

20 An arithmetic sequence has rule tn = 4 − 2n. Find t1 and the common difference d.

21 An arithmetic sequence has rule tn = 7n + 11. Find t1 and the common difference d
and describe the arithmetic sequence using a recurrence relation.

22 An arithmetic sequence has rule tn = 8 − 5n. Find t1 and the common difference d
and describe the arithmetic sequence using a recurrence relation.

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 178 Chapter 4 ■ Arithmetic and geometric sequences

4D Application of arithmetic sequences

In this section we look at several situations involving linear growth and decay that can be
modelled using arithmetic sequences.

▶▶Simple interest loans and investments

If you deposit money into a bank account, the bank is effectively borrowing money from
you. The bank will pay you a fee for using your money and this fee is called interest. If
a fixed amount of interest is paid into the account after regular time periods, it is called a
simple interest investment. If you borrow money from the bank and are charged a fixed
amount of interest after regular time periods, it is called a simple interest loan.
Simple interest is an example of an arithmetic sequence in which the starting value is the
amount borrowed or invested. The amount borrowed or invested, P, is called the principal.
The constant amount added at each step is the interest and is usually a percentage of this
principal. We will denote the amount of the investment after n years as A.
If you invest $2000 at 5% per annum, then the interest each year is $100.
Let $P be the initial amount invested.
After one year, the value of investment = $(2000 + 100) = $2100
After two years, the value of investment = $(2000 + 100 + 100) = $2200
After three years, the value of investment = $(2000 + 100 + 100 + 100) = $2300
And so on.
Hence, the value A after n years is given by the rule:
A = 2000 + 100n

Calculation of simple interest

Let $P be the amount borrowed or invested (the principal).
Let $A be the value of the investment after n years.
Let i be the percentage interest rate.
Then d = i × P is the amount of interest paid per year and is the common difference.
The value A of the simple interest investment after n years is:
A = P + nd

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 4D Application of arithmetic sequences 179  

Example 11 Calculating the value of an investment using simple interest

David invests $20 000 into a bank account. He will be paid simple interest at the rate of
5% of the investment per annum.
a Find the expression for A the value of the investment after n years.
b Find the value of the investment after 5 years.
c If David leaves the money in the account, after how many years will the investment
be worth $30 000?

Solution
a 1 Confirm the name of the variable to be Let A be the value of the investment after
used. n years.
2 The principal is $20 000. Start at n = 0. P = 20 000
3 Calculate the yearly interest. This is the 5% of 20 000 = 1000
common difference of the arithmetic d = 1000
sequence.
4 Substitute into the rule for A and d. A = 20 000 + 1000n
b 1 Substitute n = 5 into the rule. A = 20 000 + 1000 × 5
2 Evaluate for A. = 25 000
3 Write your answer in a sentence. The investment will be worth $25 000 after
five years.
c 1 F
 orm a simple equation or see that you 20 000 + 1000n = 30 000
need 10 years of $1000. 1000n = 10 000
2 Solve for n. n = 10
3 Write your answer in a sentence. The investment will be worth $30 000
after 10 years.

This is an example of linear growth.

Note: Our formula for simple interest looks different from our general formula for an arithmetic sequence.
We note that if you start with n = 0 rather than n = 1, the formula is simply tn = t0 + nd, and this is in fact
the form of our simple interest formula. This formula for the nth term of an arithmetic sequence will also
be applicable in some of the following examples. It will also be utilised in Chapter 7 of this book.

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 180 Chapter 4 ■ Arithmetic and geometric sequences

▶▶Depreciation
Over time, the value of large items will gradually decrease. A car bought new this year will
not be worth the same amount of money in a few years time. A new television bought for
$2000 today is unlikely to be worth anywhere near this amount after a few years.
There are a number of techniques for estimating the future value of an asset. Two of them,
flat-rate depreciation and unit-cost depreciation, are discussed below.

Flat-rate depreciation
Flat-rate depreciation is very similar to simple interest, but instead of adding a constant
amount of interest, a constant amount is subtracted to decay the value of the asset after
every time period. This constant amount is called the depreciation amount, and, like simple
interest, is often given as a percentage of the initial purchase price of the asset.
In the following, A is the value after n years, P is the initial value and i is the interest rate.
If a television is valued at $2000 and it depreciates at 5% per annum, then the decrease in
value each year is $100.
After one year, the value of the television = $(2000 − 100) = $1900
After two years, the value of the television = $(2000 − 100 − 100) = $1800
After three years, the value of the television = $(2000 − 100 − 100 − 100) = $1700
And so on.
Hence, the value A after n years is given by the rule:
A = 2000 − 100n

Calculation of flat-rate depreciation

Let P be the initial value of the asset.
Let A be the value of the asset after n years.
Let i be the percentage depreciation rate.
Then d = i × P is the amount of depreciation per year and is the common difference.
The value A of the asset after n years is:
A = P − nd

Example 12 Calculating flat-rate depreciation

The value of a machine is flat-rate depreciated in value by 4% of its initial value every
year. Initially it was valued at $100 000.
a Find an expression for A the value of the machine after n years.
b Find the value of the machine after 5 years.

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 4D Application of arithmetic sequences 181  

Solution
a 1 C
 onfirm the name of the variable to be Let A be the value of the machine after
used. n years.
2 The initial value is $100 000. Start at P = 100 000
n = 0.
3 Calculate the yearly depreciation. This is 4% of 100 000 = 4000
the common difference of the arithmetic
sequence. d = 4000
4 Substitute into the rule for P and d. A = 100 000 − 4000n
b 1 Substitute in n = 5 into the rule. A = 100 000 − 4000 × 5
2 Evaluate for A. = 80 000
3 Write your answer in a sentence. The machine will be worth $80 000 after
five years.

This is an example of linear decay.

Example 13 Calculating flat-rate depreciation

A new car was bought for $26 000 in 2014. The value of the car is expected to reduce by
4.5% of its original value every year.
a Write down the rule for the value of the car after n years.
b Find the year when the value of the car is first expected to be less than half its
­original value.

Solution
a 1 F
 ind the value of the common d = 4.5% × 26 000
difference d. 4.5
d=i×P
d = × 26 000
100
= 1170
2 Substitute d into rule for A. A = 26 000 − 1170n
A = P − nd
b 1 Half of the original value of the A < 13 000
car is $13 000. 26 000 − 1170n < 13 000
26 000 − 13 000 < 1170n
1170n > 13 000
n > 11.11 …
2 We are looking for a term of the You can also do this by trial and error using your
sequence that is lower than this. calculator.
3 Write your answer.
After 12 years, the value of the car will first be less
than half its original value.

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 182 Chapter 4 ■ Arithmetic and geometric sequences

Unit-cost depreciation
Some items lose value because of how often they are used, rather than because of their age.
A photocopier that is two years old but has never been used could be considered to be in
‘brand new’ condition and therefore worth the same, or close to, as it was two years ago.
But, if the same two-year-old photocopier had printed thousands of copies over those two
years, it would be worth much less than its original value.
Cars can also be depreciated according to their use rather than time. When buying a
secondhand car, people often consider the number of kilometres that the car has travelled.
A secondhand car that has travelled less kilometres could be considered a better buy than a
new car that has travelled a large distance.
When the future value of an item is determined based upon use rather than age, we use a
unit-cost depreciation method. Unit-cost depreciation can be modelled using a linear decay
recurrence relation.
In the following, A is the value after n years, P is the initial value and d is the drop in its
value for each use.

Calculation of unit-cost depreciation

Let P be the initial value of the asset.
Let A be the value of the asset after n uses.
Let d be the depreciation per use.
The value of the asset after n uses is:
A = P − nd

Example 14 Calculating unit-cost depreciation

A lawn mower was purchased for $270. Every time it is used to mow a lawn, the owner
estimates a depreciation in value of 50 cents in the mower’s worth.
a Write down the rule for the value of the asset after n mows.
b Find the value of the lawn mower after it has mowed 25 lawns.

Solution
a We use A = P − nd with A = 270 − 0.5n
P = 270, d = 0.50.
b 1 Substitute n = 25. A = 270 − 0.5 × 25
= 257.50
2 Write the answer in a The value of the lawn mower is $257.50 after
sentence. 25 mows.

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 4D Application of arithmetic sequences 183  

▶▶Other applications of arithmetic sequences

Example 15 Solving other problems using arithmetic sequences

Before starting on a weight-loss program, a man weighs 124 kg. Using a combination of
diet and exercise, he plans to lose weight at a rate of 1.5 kg a week until he reaches his
recommended weight of 94 kg. How many weeks will he take to reduce his weight to
94 g?

Solution
1 Write down the man’s expected weight at
Beginning Weight (kilograms)
the beginning of each week on the diet by
assuming a constant weight loss of 1.5 kg
of week
per week. 1 124.0
2 124.0 − 1.5 = 122.5
3 122.5 − 1.5 = 121.0
4 121.0 − 1.5 = 119.5
… …
124.0, 122.5, 121.0, 119.5, …
2 Check that his weight at the beginning of a = t1 = 124.0 and the common ­difference
each week forms an arithmetic sequence. d = −1.5.
3 Write down a rule that will enable us to wn = 124.0 − 1.5(n − 1) for n = 1, 2, 3 …
­predict his weight, wn, at the beginning of
the nth week of his diet.
4 Use the rule to determine for how many 94 = 124.0 − 1.5(n − 1)
weeks he must diet and exercise to reach his −30 = −1.5(n − 1)
recommended weight of 94 kg. −30
n−1=
−1.5
n = 21
5 Write the answer in a sentence. That is, he can expect his weight to be
down to 94 kg at the start of the 21st week.
Therefore, he must diet and exercise for
20 weeks.

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 184 Chapter 4 ■ Arithmetic and geometric sequences 4D

Exercise 4D
Calculating simple interest
Example 11 1 Suppose you invest $5000 a simple interest of 7.5% per annum.

SF
a How much interest is paid to you each year?
b Complete the following table:

End of year 1 2 3 4 5
Value ($)

c Write down an expression for the value of the investment at the end of the nth year.
d Determine the value of the investment:
i at the end of the 15th year
ii at the end of 25 years

2 Suppose you borrow $50 000 with simple interest rate of 9% per annum, for a period
of five years.
a How much interest is charged each year?
b Complete the following table:

End of year 1 2 3 4 5
Amount ($)

c Write down an expression for the amount you owe at the end of the nth year.
d If you decided to extend the loan, how much would you owe:
i at the end of the 15th year?
ii at the end of the 25th year?

3 Monica invests $60 000 into a bank account. She will be

CF
paid simple interest at the rate of 4.5% per annum.
a Find the expression for $A, the value of the
investment after n years.
b Find the value of the investment after 5 years.
c If Monica continues to invest the money, after how
many years will the investment be worth more than
$80 000?

4 Two thousand dollars is invested at an interest rate of 3.8% per annum.

a Write down the rule for the value $A for the simple interest investment.
b Use the rule to find the value of the investment after 6 years.
c Determine how many years it takes for the value of the investment to be more than
$3000.

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 4D 4D Application of arithmetic sequences 185  

5 A simple interest investment of $7000 has an interest rate of 7.4% per annum.
a Write down the rule for the value of the simple interest investment An in terms of n.
b Use this rule to find the value of the investment after 6 years.
c Determine how many weeks it takes for the value of the investment to be more
than $10 000.

Calculating flat-rate depreciation

Example 12, 13 6 The value of a machine is flat-rate depreciated in value by 4% of its initial value every
year. Initially it was valued at $100 000.
a Find an expression for $A, the value of the machine after n years.
b Find the value of the machine after 5 years.

Calculating unit-cost depreciation

Example 14, 13 7 The value of a delivery van with purchase price $48 000 is depreciated by $200 for
every 1000 kilometres travelled.
a Write a rule for the value of the delivery van after it has travelled n kilometres.
b Determine the value of the van after 15 000 kilometres.
c How many kilometres does it take for the value of the van to reach $43 000?

Solving other problems using arithmetic sequences

Example 13, 15 8 To make up a set of notes, a printer charges $2.25 for the cover and binding and an
additional 2 cents per page.
a Write down a rule for the cost, Cn, of making up a set of notes with n pages.
b What would it cost to make up a set of notes with:
i 10 pages?
ii 35 pages?
c How many pages do the notes contain if the printer charges:
i $3.85?
ii $6.25?

9 When a garbage truck starts collecting rubbish, it first stops at a corner store where it
collects 86 kg of rubbish. It then travels down a long suburban street where it picks up
40 kg of rubbish at each house.
a Write down a rule for the amount of garbage collected by the truck, gn, after n
pick-ups from houses.
b How much garbage would be carried by the truck after:
i 15 pick-ups from houses?
ii 27 pick-ups from houses?
c The maximum amount of garbage that can be carried by the truck is 1500 kg. After
picking up from the corner store, what is the maximum number of houses it can
pick up rubbish from before it is fully loaded?

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 186 Chapter 4 ■ Arithmetic and geometric sequences 4D

10 A coffee urn contains 15 litres of coffee. Coffee is served in 200 mL cups.

a Write down a rule for determining the amount of coffee in the urn, an, after n cups
of coffee have been served from the urn. Assume that each cup is completely filled.
b How much coffee will be left in the urn after:
i 23 cups have been served?
ii 45 cups have been served?
c How many cups of coffee can be served from the urn if it is necessary to keep 1.5
litres of coffee in the urn for latecomers?

11 You are offered a job with a starting salary of $20 500 per year and yearly pay rises of
$450.
a Write down a rule for determining your salary, sn, at the start of each year you
work on the job.
b What would your salary be:
i at the start of the fifth year on the job?
ii at the start of the eighth year on the job?
c At this rate, how many years would you have to be on the job to have a salary of
$50 000 per year?

12 You have $430 to spend while on an overseas holiday. To make the money last as long
as possible, you budget for $25.75 per day.
a Write down a rule for determining the amount of spending money, mn, you will
have left at the start of the nth day of your holiday.
b How much spending money would you have left:
i at the start of the seventh day?
ii at the start of the thirteenth day?
c At this spending rate, for how many days can you afford to stay on holidays?

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 4E Geometric sequences 187  

4E Geometric sequences
A sequence in which each successive term can be found by multiplying the previous term
by a constant factor is called a geometric sequence.
For example, the sequence 1, 2, 4, 8, 16, … is geometric because each successive term can
be found by multiplying the previous term by 2.
term 1 term 2 term 3 term 4 term 5
1 2 4 8 16

×2 ×2 ×2 ×2 ×2

The sequence 40, 20, 10, 5, 2.5, … is also geometric because each successive term can be
found by multiplying the previous term by 0.5.
term 1 term 2 term 3 term 4 term 5
40 20 10 5 2.5

× 0.5 × 0.5 × 0.5 × 0.5 × 0.5

▶▶The common ratio

Because of the way in which a geometric sequence is formed, the ratio between successive
terms is constant. In the language of geometric sequences, we call it the common ratio. In the
sequence:
1, 2, 4, 8, 16, …
the common ratio is 2, while in the sequence:
40, 20, 10, 5, 2.5, …
the common ratio is 0.5.
Common ratiows can also be negative; for example, the common ratio for the geometric
sequence 1, −2, 4, −8, 16, … is −2.

Method of recursion to generate a geometric sequence

The method for using recursion to generate a geometric sequence has two parts.
1 A starting point, the value of the first term t1 = a of the sequence.
2 Successively multiply each term by the common ratio r to obtain the next term.
This will generate the sequence.

For example, in words, a rule for the recursion that can be used to generate the sequence
10, 20, 40, 80, ... can be written as follows:
1 Start with 10.
2 To obtain the next term, multiply the current term by 2 and repeat the process.

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 188 Chapter 4 ■ Arithmetic and geometric sequences

A more compact way of communicating this information is to translate this rule into
symbolic form.
This notation gives us a way to describe the generation of a geometric sequence by
recursion.

t1 = a and tn+1 = r × tn, where r is the constant ratio.

This is the general recurrence relation for a geometric sequence.

Note: This also gives us a way to test whether a sequence is geometric or not.

We must have:
tn+1
=r
tn
for all whole numbers n > 1.

Example 16 Generating a geometric sequence with a recurrence relation

A geometric sequence is defined by t1 = 5, tn+1 = 2tn.

Find the first five terms.
Solution
1 Write down the starting term. t1 = 5
2 Apply the rule (multiply by 2) to generate t2 = 2 × t1 = 2 × 5 = 10
the next term.
3 Calculate three more terms. t3 = 2 × t2 = 2 × 10 = 20
t4 = 2 × t3 = 2 × 20 = 40
t5 = 2 × t4 = 2 × 40 = 80
4 Write your answer. 5, 10, 20, 40, 80

▶▶Graphing a geometric sequence

Consider the arithmetic sequences defined by:

■■V1 = 15, Vn+1 = 3Vn

■■V1 = 4, Vn+1 = 0.5 Vn
The first generates the geometric sequence 15, 45, 135, …
It is an increasing sequence, which can be used to model geometric growth.
The second generates the geometric sequence 4, 2, 1, …
It is a decreasing sequence, which can be used to model geometric decay.

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 4E Geometric sequences 189  

Sequence 1
The first few values of the sequence can be shown in a table.
The first four values of Sequence 1 are shown in the table:

n 1 2 3 4
Vn V1 = 15 V2 = 45 V3 = 135 V4 = 405

and this gives ordered pairs vn

(1, 15), (2, 45), (3, 135), (4, 405).
405
These can be graphed as shown
opposite.

135

45
5 n
O 1 2 3 4

Sequence 2
The first five values of Sequence 2 are shown in the table:

n 1 2 3 4 5
1 1
Vn V1 = 4 V2 = 2 V3 = 1 V4 = V5 =
2 4

and this gives ordered pairs Vn

( 2) ( 4)
1 1 10
(1, 4), (2, 2), (3, 1), 4, , 5, . 9
8
These can be graphed as shown opposite. 7
6
5
4
3
2
1
n
O 1 2 3 4 5

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 190 Chapter 4 ■ Arithmetic and geometric sequences

In general:

■■if r > 1, the recurrence relation tn+ 1 = r tn can be used to model geometric growth
■■if r < 1, the recurrence relation tn+ 1 = r tn can be used to model geometric decay.
Using a graph to investigate the pattern of growth in a
geometric sequence
The graphs below display the terms in four different geometric sequences:

■■Sequence 1: t1 = a = 32, r = 1.5, n = 1, 2, 3, …

■■Sequence 2: t1 = a = 32, r = 2.0, n = 1, 2, 3, …
■■Sequence 3: t1 = a = 32, r = 0.5, n = 1, 2, 3, …
■■Sequence 4: t1 = a = 32, r = 0.25, n = 1, 2, 3, …
tn
tn
35
600 Sequence 2 30
500 a = 32, r = 2.0 25
400 20
Sequence 3
300 15 a = 32, r = 0.5
200 10
100 Sequence 1 5 Sequence 4
a = 32, r = 0.25
a = 32, r = 1.5 n
n
       O
O 1 2 3 4 5 1 2 3 4 5

The key characteristics to note are:

■■that the points in the graphs are not collinear but lie on what is called an exponential
curve.
■■ if the common ratio, r, is greater than 1, the terms in the sequence increase in value. The
bigger the value of r, the more rapid the increase.
■■ if the common ratio, r, is less than 1, the terms in the sequence decrease in value. The
closer the value to 0 the more rapid the decrease.
Note: When r is negative (not shown), terms oscillate between positive and negative values.

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 4E 4E Geometric sequences 191  

Example 17 Graphing geometric sequences

Prepare a table of values and plot the first five terms to illustrate the sequence
defined by:
t1 = 400 tn+1 = 0.75tn

Solution
1 Use the recursion relation
n 1 2 3 4 5
tn+ 1 = 0.75tn to complete the
table. tn 400 300 225 168.75 126.5625

Start with t1 = 400.

t2 = 0.75t1 = 0.75 × 400 = 300
t3 = 0.75t2 = 0.75 × 300 = 225
2 Use the values in the table to plot tn
the ordered pairs 400
(1, 400), (2, 300), (3, 225), …
300
225
168.75
126.563

n
O 1 2 3 4 5

Exercise 4E
Generating a geometric sequence with a recurrence relation
Example 16 1 A geometric sequence is defined by:

SF
t1 = 3, tn+1 = 4 tn
Find the first five terms.
2 A geometric sequence is defined by:
t1 = 15, tn+1 = 2 tn
Find the first five terms.
3 Consider the geometric sequence 2, 20, 200, 2000, …
a What is the common ratio?
b What is the next term in the sequence?
c Starting with 2, how many times do you have to multiply by the common ratio to
get to term 5?
d Starting with 2, how many times do you have to multiply by the common ratio to
get to term 15? What is the value of term 15? Give your answer using scientific
notation.

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 192 Chapter 4 ■ Arithmetic and geometric sequences 4E

4 Consider the geometric sequence 1024, 256, 64, 16, …

a What is the common ratio?
b What is the next term in the sequence?
c Starting with 1024, how many times do you have to multiply by the common ratio
to get to term 7? What is the value of term 7?
d What is the value of term 10? What is the value of term 50?

5 Consider the sequence −1, 5, −25, 125, …

a What is the common ratio?
b What is the next term in the sequence?
c Starting with −1, how many times do you have to multiply by the common ratio to
get to term 6? What is the value of term 6?
d Starting with −1, how many times do you have to multiply by the common ratio to
get to term 15? What is the value of term 15?

Graphing a geometric sequence

Example 17 6 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 9, tn+1 = 2tn

7 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
1
t1 = 12, tn+1 = tn
2

8 Prepare a table of values and plot a graph to show the first five terms of the sequence
defined by:
t1 = 4, tn+1 = 4tn

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 4F A general rule for finding the nth term of a geometric sequence 193  

4F A general rule for finding the nth term of a

geometric sequence
As for arithmetic sequences, we use tn to indicate the nth term in the sequence and a to
represent the first term in the sequence.
Finally, we use the symbol r to represent the common ratio. For the sequence 2, 4, 8, 16, …
the common ratio r equals 2.

▶▶The rule for the nth term of a geometric sequence

Consider a geometric sequence with first term a and common ratio r.
Then:
t1 =a
t2 = t1 × r = ar
t3 = t2 × r = ar2
t4 = t3 × r = ar3
t5 = t4 × r = ar4
t6 = t5 × r = ar5

and so on.

The rule for the nth term of a geometric sequence

Thus, following the pattern, we can write:
tn = ar n−1
which gives us a rule for finding the nth term of a geometric sequence in terms of the
first term, t1 = a, and the common ratio, r.

Example 18 Using the general rule for a geometric sequence

The first term of a geometric sequence is t1 = a = 6 and the common ratio is r = 2.

Use the rule to determine the value of the seventh term.
Solution
Substitute t1 = a = 6 and r = 2 in the t7 = 6 × 27−1
rule tn = ar n−1. = 6 × 26
= 384

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 194 Chapter 4 ■ Arithmetic and geometric sequences

Example 19 Using the general rule for a geometric sequence

Use the rule to determine the value of the eighth term of the geometric sequence
100, 50, 25, 12.5, …
Solution
For this sequence t1 = a = 100 and r = 0.5. t8 = 100 × 0.58−1
Substitute into the rule tn = ar n−1. = 100 × 0.57
= 0.78125

Example 20 Determining a geometric sequence given two terms

In a geometric sequence, the fourth term is 24 and the ninth term is 768. Write down
the first three terms of the sequence.
Solution
1 Substitute t4 = 24 in tn = ar n−1 with n = 4. 24 = ar 4−1 = ar 3   (1)
2 Substitute t9 = 768 in tn = ar n−1 with n = 9. 768 = ar 9−1 = ar 8  (2)
3 Find a and r by solving the simultaneous 768 ar 8
equations (1) and (2).
=
24 ar 3
Divide (2) by (1). 32 = r 5
r=2
4 Substitute r = 2 in equation (1). 24 = a × 23
or 24 = 8a so a = 3
5 Write the first three terms of the sequence. The first three terms of the sequence are
3, 6, 12.

Example 21 Determining how many terms of a geometric sequence are required

to reach a particular number

How many terms would we have to write down in the geometric sequence
0.5, 5, 50, 500, … before we found a term greater than 1 000 000?

Solution
Substitute a = 0.5 and r = 10 in the general rule 0.5 × 10n−1 > 1 000 000
for a geometric sequence. 10n−1 > 2 000 000
We want to find n so that: n−1>6
tn = 0.5 × 10n−1 > 1 000 000 n>7
Solve by trial and error with your calculator.
102 = 100, 103 = 1000, … , 106 = 1 000 000, We would have to write down eight terms
107 = 10 000 000 to find the first term that exceeds
1 000 000.

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 4F A general rule for finding the nth term of a geometric sequence 195  

▶▶Graphing a geometric sequence

In investigating the properties of geometric sequences, particularly the rate at which the
terms in the series either grow or decay, it is useful to have a graphical representation of the
sequence.

Example 22 Graphing a geometric sequence

Consider the geometric sequence with t1 = a = 3 and the common ratio r = 2.

a Find the rule for this geometric sequence.
b Prepare a table of values for the sequence for n = 1 to n = 5.
c Plot a graph from the table of values.
Solution
a Find an expression for the nth term, tn, tn = 3 × 2 n−1 for n = 1, 2, 3, …
in terms of n.
b Generate a table of values using the rule.
n 1 2 3 4 5
For example, t3 = 3 × 23–1 = 12.
tn 3 6 12 24 48
c Plot the points on a graph with n on the tn
horizontal axis and tn on the vertical axis. 50
Do not join up the points as the terms in the 45
40
sequence are only defined for n = 1, 2, 3, … 35
30
25
20
15
10
5
n
O 1 2 3 4 5

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 196 Chapter 4 ■ Arithmetic and geometric sequences 4F

Exercise 4F
Using the rule to generate a geometric sequence
Example 18 1 The first term of a geometric sequence is a = 1 and the common ratio is r = 4. Use

SF
the rule to determine the value of:
a the third term
b the seventh term
c the 15th term

2 A geometric sequence is described by the recurrence relation t1 = 8 and tn+1 = 5tn.

Write the rule for the nth term of this sequence.

3 A geometric sequence is described by the recurrence relation t1 = 5 and tn+1 = 0.6tn.

Write the rule for the nth term of this sequence.

Example 19 4 Use the rule to determine the value of:

a the seventh term of the geometric sequence 1, 5, 25, 125, 625, …
b the eighth term of the geometric sequence 10 000, 2000, 400, …
c the 10th term of the geometric sequence −1, 2, −4, 8, …
d the ninth term of the geometric sequence −20, −60, −180, …
1
e the eighth term of the geometric sequence 2, 1, , …
2
f the fifth term of the geometric sequence 110, 121, 133.1, …
1 1 1
g the seventh term of the geometric sequence 1, − , , − , …
2 4 8

Determining a geometric sequence given two terms

Example 20 5 Write down the first three terms of the geometric sequence in which:

CF
a the fifth term is 81 and the eighth term is 2187
b the second term is 10 000 and the fifth term is 1250
c the third term is 40 and the sixth term is −320
d the second term is 160 and the fourth term is 250 (r > 0)

Determining how many terms of a geometric sequence are required to

reach a particular number
Example 21 6 How many terms would we have to write down in the geometric sequence:
a 2, 4, 8, 16, … before we found a term greater than 250?
b 1, 1.1, 1.21, … before we found a term greater than 2?
c 100, 80, 64, … before we found a term less than 10?
d −8, −16, −32, … before we found a term equal to −4096?
e 0.9, 0.81, 0.729, … before we found a term less than 0.1?
f 2000, 2100, 2205, … before we found a term greater than 4000?
g 6000, 5700, 5415, … before we found a term less than 3000?

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 4F 4F A general rule for finding the nth term of a geometric sequence 197  

Graphing geometric sequences

Example 22 7 Plot the first five terms of each of the following geometric sequences.

SF
a Sequence A: t1 = a = 1, r = 2, n = 1, 2, 3, …
b Sequence B: t1 = a = 100, r = 0.5, n = 1, 2, 3, …
c Sequence C: t1 = a = 1024, r = 0.75, n = 1, 2, 3, …
d Sequence D: t1 = a = 32, r = 1.5, n = 1, 2, 3, …
e Sequence E: t1 = a = 1024, r = −0.25, n = 1, 2, 3, …

8 Three sequences are displayed in the graphs below. For each sequence:
a determine the value of the first term, a
b determine from the trend of the points whether the value of r is greater than 1 or
between 0 and 1
c use the first two points to estimate the value of r
tn
25 Sequence A
20
15 Sequence B

10
5
Sequence C
n
O 1 2 3 4 5

9 The sequence defined by the rule for the nth term, tn = 2n is a geometric sequence.
a List the first four terms of the sequence.
b State the value of the common ratio.

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 198 Chapter 4 ■ Arithmetic and geometric sequences 

4G Applications of geometric sequences

Populations grow in size and genuine antiques gain value in time while most cars depreciate
in value with time. These are examples of growth and decay of quantities that can be
modelled with a geometric sequence.
Many situations that we experience in our everyday lives can be mathematically
represented, or modelled, with geometric sequences.

Example 23 Applying of geometric sequence

A dish in a laboratory contains 150 000 bacteria. The population of bacteria is expected
to double in size every day.
a Using recursion, find the number of bacteria after 1, 2, 3 and 4 days.
b Write a rule for the number, N, of bacteria after n days.
c Use the rule to find the number of bacteria after 7 days.
Solution
a The number of bacteria is doubled N umber of bacteria at end of day one
each day. Therefore, we multiply by = 2 × 150 000 = 300 000
2 each time to find the number of Number of bacteria at end of day two
bacteria the next day.
= 2 × 300 000 = 600 000
Number of bacteria at end of day three
= 2 × 600 000 = 1 200 000
Number of bacteria at end of day four
= 2 × 1 200 000 = 2 400 000
b Multiplying by 2 n times results in a N = 150 000 × 2n
factor of 2n.
c Substitute n = 7 in rule. N = 150 000 × 27
= 19 200 000

▶▶Percentage increase and decrease

The number of koalas in a reserve might increase by 5% each year. If there are 400 koalas
this year, we can expect there to be an extra 5% next year, in addition to the 400 koalas that
are already there.
This year: number of koalas = 400
Next year: number of koalas = 400 + 5% of 400
5
= 400 + × 400
100
= 400 + 20
= 420 koalas

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 4G Applications of geometric sequences 199  

There is an easier way to calculate the number of koalas next year.

If this year we have 400 koalas, this represents ALL of the koalas currently in the reserve,
or 100% of them. If the number of koalas grows by 5% in one year, then next year there will
be 100% of the koalas plus an extra 5% in the reserve. Next year there will be 105% of this
year’s number.
This year: number of koalas = 400
Next year: number of koalas = 105% of 400
105
= × 400
100
= 1.05 × 400
= 420 koalas
If, on the other hand, the koala population is decaying by 5% each year, next year there
would be 5% less koalas than this year. This would be 100% − 5% or 95% of this year’s
number of koalas.
The rate of geometric growth and decay is often given in the form of a percentage of the
starting term.
As usual we use r for the common ratio in these problems and i % for the percentage
growth.

Percentage increase and decrease

If the percentage increase for geometric growth is i %, then r = 1 + i %.
If the percentage decrease for geometric decay is i %, then r = 1 − i %.

▶▶Compound interest
Most interest calculations are not as straightforward as simple interest. The more usual form
of interest is compound interest where any interest that is earned after one time period
is added to the principal and then contributes to the earning of interest in the next time
period. This means that the value of the investment grows in increasing amounts, or grows
geometrically, instead of by the same amount as in simple interest.
Consider the investment of $5000 into an account that pays interest of 8% per annum. The
interest will be paid into the account after each year and this interest will effectively be
re-invested and will earn interest in the next year. When the interest is itself earning interest,
we say the interest is compounding.

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 200 Chapter 4 ■ Arithmetic and geometric sequences

We can model this compound interest investment with a recurrence relation. The sequence
of numbers that represent the value of the investment from year to year will have a
starting term 5000. The value of the investment will grow at a rate of 8% each year, so the
multiplying factor will be:
r = 1 + i%
r = 1.08
$5000 is the initial amount invested
After one year the value of investment = $(5000 × 1.08) = $5400
After two years the value of investment = $(5000 × 1.08 × 1.08) = $5832
After three years the value of investment = $(5000 × 1.08 × 1.08 × 1.08) = $6298.56
And so on.
Hence, the value $A after n years is given by the rule:
A = 5000 × 1.08n

Calculation of compound interest loans and investments

Let A be the value of a compound interest loan or investment after n years.
Let P be the amount borrowed or invested (principal).
Let i be the annual interest rate of the loan or investment.
A = P × rn
where r = 1 + i

Example 24 Calculating compound interest

An amount of $2000 is invested with compound interest at an interest rate of

7.5% per annum.
a Find the rule for the value of the investment after n years.
b Find the value of the investment after 4 years.
c Determine when the value of the investment will first exceed $3000.
Solution
a Substitute the values for P
7.5
P = 2000 and r = 1 + = 1.075
100
and r into the formula A = 2000 × 1.075 n
A = P × rn
with r = 1 + i
b Substitute n = 4. A = 2000 × 1.0754
= 2670.938 …
The value of the investment is $2670.94 after 4 years.

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 4G Applications of geometric sequences 201  

Solution
c Work with trial and error to After 5 years, A = 2000 × 1.0755 = 2871.258 …
determine when the investment After 6 years, A = 2000 × 1.0756 = 3086.60 …
will exceed $3000. After 6 years the investment will exceed $3000.

▶▶Reducing-balance depreciation
Earlier in the chapter, we studied two different methods for depreciating the value of an asset,
both of which were examples of linear decay. Reducing-balance depreciation is another
method of depreciation, one where the value of an asset decays geometrically. Each year, the
value will be reduced by a percentage, i%, of the previous year’s value. The calculations are
very similar to compounding interest, but with decay in value, rather than growth.

Calculation of reducing-balance depreciation

Let A be the value of the asset after n years.
Let P be the initial cost of the asset.
Let i be the annual interest rate of the loan or investment.
A = P × rn
where r = 1 − i %

Example 25 Calculating reducing-balance depreciation

An item of office furniture has a purchase price of $6900. It can be considered to be

depreciating at a reducing-balance rate of 8.4% per annum.
a Find the rule for the value of the office furniture after n years.
b Find the value of the office furniture after 4 years.
c Determine when the value of the office furniture will be less than $3000.
Solution
a 1 Write down the purchase price A = 6900
of the furniture, A.
2 Calculate the value or r. The depreciation rate is 8.4% per annum.
8.4
r=1−
100
= 0.916
3 Use the rule A = P × r n A = 6900 × 0.916 n
b Substitute n = 4 in rule. A = 6900 × 0.9164
= 4857.7033 …
Answer to the nearest cent The value of the office furniture after 4 years is $4857.70.

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 202 Chapter 4 ■ Arithmetic and geometric sequences

c Use trial and error to determine When n = 5, A = 6900 × 0.9165

when the value of the furniture = 4449.656 …
will be less than $3000 by When n = 6, A = 6900 × 0.9166
substituting values of n in the = 4075.885 …
rule A = 6900 × 0.916n. When n = 7, A = 6900 × 0.9167
= 3733.510 …
When n = 8, A = 6900 × 0.9168
= 3419.895 …
When n = 9, A = 6900 × 0.9169
= 3132.624 …
When n = 10, A = 6900 × 0.91610
= 2869.484 …
After 10 years the value is less that $3000.

Note: Be careful if the question asks for the ‘value’ at the beginning of the year.

The same idea can be applied to other situations where an amount is decreasing by a contant
percentage for each period of time.

Example 26 Applying geometric sequences

A swimming pool is filled with 200 000 litres of water.

Under certain conditions, 2% of the water in the pool will evaporate each day.
a Determine the rule for the amount of water in the pool at the end of the nth day.
b Find the amount of water in the pool at the end of the eighth day.
Solution
a 1 Determine the value of r. L et Vn be the volume of water in the pool after n days.
The water volume decays by 2% every day.
2
r=1−
100
= 0.98
2 Substitute the value r into Vn = 200 000 × 0.98n
the rule
Vn = 200 000 × r n
b V8 = 200 000 × r8 V8 = 200 000 × 0.988
= 170 153 litres to the nearest litre

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 4G 4G Applications of geometric sequences 203  

▶▶Interest rates over different periods

Compound interest rates are usually quoted as annual rates, or interest rate per annum. The
time period after which compound interest is calculated and paid is called the compounding
period. For example, the compounding period could be months or days.
An interest rate given per annum can, by convention, be converted to a compounding
interest rate for a shorter period by dividing this interest rate per annum by the appropriate
number.
For example, an interest rate of 3.6% per annum gives a monthly interest rate of
(3.6 ÷ 12) = 0.3% per month.
Note: Problems involving interest rates for compounding periods other than a year appear in the review
section of this chapter. This is discussed in more detail in Chapter 7.

Exercise 4G
Applying geometric sequences
Example 23 1 The following rule can be used to model the number of shares an investor owns after

SF
n months, if the investor sells 4% of the shares he owns after every month and the
investor initially owns P shares.
A = P × 0.96n
where A is the number of shares owned by the investor after n months.
a How many shares does the investor have after m years?
b Write down the rule for the number of shares owned after n months if the investor
owned 30 000 shares and sold 3.5% of the shares owned after every month.

2 The population of kangaroos in a national park is increasing by 5% every year. There

are currently 2700 kangaroos in the national park.
a Write down the rule for the number of kangaroos after n years.
b How many kangaroos are there after 5 years?
c How many years does it take for the kangaroo population to double?
There are also 830 wombats in the park. Their numbers are increasing by 4%
every year.
d How many wombats are there in the park after 4 years?
e How long does it take for the number of wombats in the park to double?

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 204 Chapter 4 ■ Arithmetic and geometric sequences 4G

Calculating compound interest

Example 24 3 An investment of $6000 earns compounding interest at a rate of 4.2% per annum.

SF
Write down the value of the investment after n years.

4 A loan of $20 000 is charged compounding interest at the rate of 6.3% per annum.

CF
a Write down the value of the loan after n years.
b Determine how many years it takes for the value of the loan to first exceed
$30 000.
c Write down the rule for the value of a loan of $18 000 at a compounding interest
rate of 9.4% per annum after n years.

Calculating reducing-balance depreciation

Example 25 5 A motorcycle was purchased new for $9800 and is depreciated using a reducing-

SF
balance depreciation method with an annual depreciation rate of 3.5%.
a Determine the rule for the value of the motorcycle after n years.
b What is the value of the motorcycle after 5 years?
c What is the depreciation of the motorcycle in the third year?

6 An investment of $8000 earns 12.5% compound interest each year.

CF
a Write down a rule for the value of the investment after n years.
b Use the rule to find the value of the investment after three years.
c How much interest has been earned over three years?
d How much interest was earned in the third year of the investment?

7 A loan of $3300 is charged 7.5% compound interest each year.

a Write down a rule for the amount owed after n years.
b Use the rule to find the value of the loan after 10 years.
c How much interest has been charged over 10 years?
d How much interest was charged in the 10th year of the investment?

8 A stereo system, initially valued at $1200, is depreciated using ­

reducing-balance depreciation of 12%.
a Write down a rule for the value of the stereo system after n years.
b Use the rule to find the value of the stereo system after seven years.

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 4G 4G Applications of geometric sequences 205  

Applying geometric sequences

Example 26 9 A ball is dropped vertically from a tower 3.6 metres high and the height of its rebound
is recorded for four successive bounces. The results are shown in the table below:

Bounce number 0 1 2 3
Height (centimetres) 360.00 270.00 202.50 151.875

a Do the heights of the bouncing ball given in the table form a geometric sequence?
Explain.
b Assuming that the height of the bouncing ball follows a geometric sequence:
i predict the height of the fourth bounce
ii write down an expression for the height of the nth bounce
iii predict the height of the 15th bounce

10 Suppose a newly discovered virulent bacteria replicates itself every five minutes.
a If we start off with 10 bacteria, how many bacteria will there be after five minutes?
b Label the first five minutes Time period 1, the second five minutes Time
period 2, etc. Complete the following table.

Time period 1 2 3
Number of bacteria 10

c Write down an expression for the number of bacteria at the start of the nth time
period.
d Determine the number of bacteria:
i at the start of the fifth time period
ii after 30 minutes
iii after 1 hour

11 A fish population increases its size by 40% every six months, provided the conditions
are ideal.
a Starting with a population of 1000 fish, how many fish would there be after six
months?
b Label the first six months Time period 1, the second six months Time period 2, etc.
Complete the following table.

Time period 1 2 3 4
Number of fish 1000

c Write down an expression for the number of fish in the population at the start of
the nth time period.
d Determine the number of fish:
i at the start of the seventh time period
ii after 5 years
iii after 10 years

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 206 Chapter 4 ■ Arithmetic and geometric sequences 4G

12 Suppose a car costs $20 000 when new. Assume that it loses 7.5% of its value
each year.
a What is the value of the car at the start of the second year?
b Label the first year Time period 1, the second year Time period 2, etc. Complete
the following table.

Time period 1 2 3 4
Value of car ($) 20 000

c Write down an expression for the value of the car at the start of the nth year.
d Determine the value of the car:
i at the start of the seventh year of its life
ii after 8 years
iii after 15 years

13 When a man purchases an antique table for $12 000, he is told its value will increase
by 125% every 25 years.
a Making this assumption, how much do you expect the table to be worth after
25 years?
b Label the first 25 years Time period 1, the second 25 years Time period 2, etc.
Complete the following table.

Time period 1 2 3
Value of antique table ($) 12 000

c Write down an expression for the value of the table at the start of the nth time
period.
d Determine the value of the table:
i at the start of the fifth time period
ii after 150 years
iii after 250 years

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 Chapter 4 Review 207  

Review
Key ideas and chapter summary

Sequence A sequence is a list of numbers or symbols written in

AS ­succession. For example, 5, 15, 25, …
Sequences often have patterns that mean we can write
rules and predict the terms that make up the sequence.

Term Each number or symbol that makes up a sequence is called

a term.

Recursion Recursion involves repeating the same calculation over and

over, using the previous result to calculate the next result.

Recurrence relation Recurrence relations define the terms of a sequence using

recursive calculations. The rule of the recurrence relation
relies on one term in the sequence, tn, to generate the next
term in the sequence, tn+1. The recurrence relation must
show the starting value, t1, and the rule.

Modelling Modelling is the use of a mathematical rule or formula to rep-

resent or model real-life situations. Recurrence ­relations
can be used to model situations involving the growth
(increase) or decay (decrease) in values of a quantity.

Arithmetic sequences A sequence is arithmetic if it satisfies the recurrence

relation:
tn+1 = tn + d and a starting point usually t1.
Arithmetic sequences are used to model linear growth and
linear decay situations.
The rule for the nth term of an arithmetic sequence is:
tn = t1 + (n − 1)d
= a + (n − 1)d, where a = t1 is the starting value.

Linear growth When a recurrence relation rule involves adding a constant

amount, d, to each term, the terms of the sequence will
increase uniformly through the sequence. The terms will
grow linearly.
Linear growth can be modelled by the recurrence ­relation or
a = t1 = starting value, tn+1 = tn + d
where d is a ­positive real number.

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 208 Chapter 4 ■ Arithmetic and geometric sequences
Review

Linear decay When a recurrence relation rule involves subtracting

a ­constant amount from each term, the terms of the
sequence will decrease uniformly through the sequence.
The terms will decay linearly.
Linear decay can be modelled by the recurrence relation
t1 = starting value, tn+1 = tn − d
where d is a positive real number.

Linear growth and decay The value of a quantity that grows or decays linearly can
rule be found using the general rule tn = t1 + (n − 1)d, where
t1 is the starting value, tn is the value of the quantity after n
steps and d is a real number.

Geometric sequences A sequence is geometric if it satisfies the recurrence

­relation: tn+1 = r × tn and a starting point usually t1.
Geometric sequences are used to model geometric growth
and linear decay situations.
The rule for the nth term of a geometric sequence is:
tn = rn–1t1 = rn–1a, where a = t1 is the starting value.

Geometric growth When a recurrence relation rule involves multiplying by a

factor, r, that is larger than 1, the terms of the sequence
increase through the sequence. The terms will grow
geometrically.
Geometric growth can be modelled by the recurrence ­
relation
t1 = a = starting value, tn+1 = r × tn, where r > 1.

Geometric decay When a recurrence relation rule involves multiplying by

a factor that is smaller than 1, the terms of the sequence
decrease through the sequence. The terms will decay
geometrically.
Geometric decay can be modelled by the recurrence ­
relation
t1 = a = starting value, tn+1 = r × tn, where r < 1.

Geometric growth and The value of a quantity that grows or decays geometrically
decay rule can be found using the general rule
tn = rn–1 × t1 = arn−1 where tn is the value of the quantity
after n steps.

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 Chapter 4 Review 209  

Review
Principal The principal is the initial amount that is invested or
borrowed.

Balance The value of a loan or investment at any time during the

loan or investment period is the balance.

Interest Interest is the fee that is added to a loan or the payment

for investing money.

Simple interest Simple interest is a fixed amount of interest that is paid

at regular time intervals. Simple interest is an example of
linear growth.

Depreciation Depreciation is the amount by which the value of an item

decreases after a period of time.

Flat-rate depreciation A constant amount that is subtracted from the value of an

item at regular time intervals. Flat-rate depreciation is an
example of linear decay.

Unit-cost depreciation Depreciation that is calculated based on units of use rather

than time. Unit-cost depreciation is an example of linear
decay.

Compounding period Interest rates are often quoted as annual rates (per annum).
Interest is sometimes calculated more regularly than each
year, for example, each quarter, month, fortnight, week or
day.
The time period for the calculation of interest is called the
compounding period.

Compound interest When interest is added to a loan or investment and then

contributes to earning more interest, the interest is said to
compound. Compound interest is an example of geometric
growth.

Reducing-balance When the value of an item decreases as a percentage of

depreciation its value after each time period, it is said to be ­depreciating
using a reducing-balance method. Reducing-balance
depreciation is an example of geometric decay.

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 210 Chapter 4 ■ Arithmetic and geometric sequences
Review

Skills check
Having completed this chapter, you should be able to:

■■ generate a sequence of terms from a recurrence relation by hand and using calculator
recursion
■■ identify arithmetic sequences
■■ define a recurrence relation for an arithmetic sequence
■■ work with the formula tn = a + (n − 1)d for the nth term of an arithmetic sequence
■■ determine the value of simple interest loans and investments
■■ determine the value of items depreciating using flat-rate depreciation
■■ determine the value of items depreciating using unit-cost depreciation
■■ identify geometric sequences
■■ define a recurrence relation for a geometric sequence
■■ work with the formula tn = ar n–1 for the nth term of an geometric sequence
■■ determine the value of compound interest loans and investments
■■ determine the value of items using reducing-balance depreciation.

Multiple-choice questions
1 Which of the following could be the first five terms of an arithmetic sequence?
A 2, 4, 2, 4, 2
B 1, 10, 100, 1000, 10 000
C −189, −89, 11, 111, 211
D 1, 4, 9, 16, 25
E 4, 4, 6, 6, 8

2 Which of the following is not an arithmetic sequence?

A 11, 2, –8, –19, …
B 4, 7, 10, 13, …
C 57, 51, 45, 39, …
D –3, –5, –7, –9, …
E 1, 2, 3, 4, …

3 The first term of a sequence is 3. Each subsequent term is 0.6 times the previous term.
What is the sixth term correct to two decimal places?
A 0.14 B 0.23 C 6.92 D 7.15 E 7.5

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 Chapter 4 Review 211  

Review
4 The nth term of the sequence defined by the recurrence relation t1 = 50 and
1
tn+1 = tn is:
2
A tn = 50 × 2−n
B tn = 50 × 2−n+1
C tn = 50 × 2−2n+1
D tn = 50 × 2−2n
E tn = 50 × 2−2n−1

5 The ninth term of the arithmetic sequence 44, 41, 38, … is:
A 8 B 17 C 20 D 23 E 26

6 The following is a geometric sequence 15, −45, 135, −405, … The common ratio r is
equal to:
A −3 B −2 C 1 D 2 E 3

7 A recurrence relation is defined by Tn+1 = 4Tn + 5, where T1 = 3. T4 is equal to:

A 73 B 75 C 85 D 297 E 1193

8 The rungs of a ladder diminish uniformly in length from 30 cm at the bottom of the
ladder to 22.5 cm at the top of the ladder. There are 16 rungs altogether. The length, in
centimetres, of the 10th rung up the ladder is:
A 24.5 B 25.0 C 25.3 D 25.5 E 25.8

9 The sequence generated by the recurrence relation V0 = 5, Vn+1 = Vn − 3 is:

A 5, 15, 45, 135, 405, …
B 5, 8, 11, 14, 17, …
C 5, 2, −1, −4, −7, …
D 5, 15, 45, 135, 405, …
E 5, −15, 45, −135, 405, …

10 Brian has two trees in his backyard. Every month, he will plant three more trees. A
recurrence relation model, Tn, for the number of trees in Brian’s backyard at the start
of the month n, is:
A T1 = 2, Tn+1 = 3Tn
B T1 = 2, Tn+1 = 3Tn + 3
C T1 = 2, Tn+1 = Tn + 3
D T1 = 2, Tn+1 = Tn − 3
E T1 = 2, Tn+1 = 3Tn − 3

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 212 Chapter 4 ■ Arithmetic and geometric sequences
Review

11 Jennifer invests $2000 with a bank. She will be paid simple interest at the rate of 5.1%
per annum. If Vn is the value of Jennifer’s investment after n − 1 years, the recurrence
relation model for Jennifer’s investment is:
A V1 = 2000, Vn+1 = Vn + 5.1
B V1 = 2000, Vn+1 = 5.1 Vn
C V1 = 2000, Vn+1 = 0.051 Vn + 102
D V1 = 2000, Vn+1 = Vn + 102
E V1 = 2000, Vn+1 = 5.1Vn + 2000

12 A sequence is generated from the recurrence relation V1 = 40, Vn+1 = Vn − 16.

The rule for the value of the term Vn is:
A Vn = 40n − 16
B Vn = 56 − 16n
C Vn = 40n
D Vn = 40 + 16n
E Vn = 40n − 16

13 A computer is depreciated using a flat-rate depreciation method. It was purchased for

$2800 and depreciates at the rate of 8% per annum. The amount of depreciation after
4 years is:
A $224 B $448 C $672 D $896 E $1904

14 A car purchased for $18 990 is depreciated using a unit-cost depreciation method.
After travelling a total of 20 000 kilometres, it has an estimated value of $15 990. The
depreciation amount, per kilometre, is:
A $0.15 B $0.80 C $0.95 D $6.67 E $3000

15 A population of penguins is decreasing by 8% every year. There are currently 2700

penguins in the population. The number of penguins in the population after n years,
A, is:
A 2700 × 1.8n
B 2700 × 1.08n
C 2700 × 0.92n
D 2700 + 1.08n
E 2700 + 0.08 n

16 Sandra invests $6000 in an account that pays compounding interest at the rate of
4.57% per annum. The number of years it takes for the investment to exceed $8000 is:
A 5 B 6 C 7 D 8 E 9

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 Chapter 4 Review 213  

Review
17 An investment of $50 000 is made at a fixed rate of interest compounding annually
over a number of years. Which graph best represents the value of the investment at the
end of each year?
A B C

Amount
Amount

Amount
Year Year Year

D E

Amount
Amount

Year Year

18 After 10 years, a compound interest investment of $8000 earned a total of $4000 in

interest. The annual interest rate of this investment was closest to:
A 2.5%
B 4.14%
C 5.03%
D 7.2%
E 50%

19 The second and fifth terms of a geometric sequence are –24 and 1536, respectively.
The rule or the nth term is:
A tn = 6 × (–4) n−1
B tn = 6 × 4n
C tn = 6 × 4n−1
D tn = 4 × 3n−1
E tn = 4 × (–3) n−1

20 The seventeenth and nineteenth terms of an arithmetic sequence are –28 and −102,
respectively. The rule or the nth term is:
A tn = 564 − 37(n − 2)
B tn = 564 − 37(n + 1)
C tn = 564 + 37(n + 1)
D tn = 564 − 37(n − 1)
E tn = 564 − 37(n + 2)

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 214 Chapter 4 ■ Arithmetic and geometric sequences
Review

Short-answer questions
1 For an arithmetic sequence with a = t1 = 6 and d = 5. Determine t9.

SF
2 For an arithmetic sequence with a = t1 = 20 and d = 4. Determine t10.

3 For a geometric sequence with t1 = 20 and r = 2. Determine t5.

4 For a geometric sequence with t1 = 2000 and r = 0.25. Determine t5.

5 In an arithmetic sequence with t5 = 22 and t10 = 47. Determine t15.

6 Find an expression for the nth term of the arithmetic sequence 13, 9, 5, …

7 For an arithmetic sequence with rule tn = 5n − 4, write down the values of t1, t2 and t3.

8 For a geometric sequence with rule tn = 5 × 2n write down the values of t1, t2 and t3.

9 An arithmetic sequence has a = t1 = 9 and d = 3. If tn = 36, find the value of n.

10 A geometric sequence has a = t1 = 2 and r = 3. If tn = 13 122, find the value of n.

11 A sequence is defined by the recurrence relation tn = tn–1 + 6, with t1 = 6. Write

down the first three terms.

12 A sequence is defined by the recurrence relation tn = 0.5tn–1, with t1 = 1000. Write

down the first three terms.

13 A sequence is defined by the recurrence relation tn = tn–1 − 5, with t1 = 8. Write down

a rule for the nth term of the sequence.

14 A sequence is defined by the recurrence relation tn = 3tn–1, with t1 = 1. Write down a

rule for the nth term of the sequence.

15 In a geometric sequence in which all the terms are positive, t3 = 18 and t5 = 162. CF
Determine t8.

16 A sequence is generated from the recurrence relation t1 = 2, tn+1 = 6tn.

a Write down a rule for the value of the nth term of this sequence.
b Use the rule to find t5.
c Use the rule to find the value of t18.
1
17 A sequence is generated from the recurrence relation t1 = 120, tn+1 = tn
4
a Write down a rule for the value of the nth term of this sequence.
b Use the rule to find t3.
c Use the rule to find the value of t14.

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 Chapter 4 Review 215  

Review
18 A car was purchased for $38 500. It depreciates in value at a rate of 9.5% per year,
using a reducing-balance depreciation method.
a Write down a rule for the value of the car after n years.
b Use the rule to find the value of the car after five years.
c What is the total depreciation of the car over five years?

19 Jack borrows $20 000 from a bank and is charged simple interest at a rate of 9.4% per
annum. Let tn be the value of the loan after n years.
a Write down a rule for the value of the loan after n years.
b How much will Jack need to pay the bank after 5 years?
c How many years does it take the value of Jack’s loan to reach $40 680?

20 A commercial cleaner bought a new vacuum cleaner for $1650. The value of the
vacuum cleaner decreases by $10 for every 50 offices that it cleans.
a By how much does the cleaning of one office depreciate the value of the vacuum
cleaner?
b Write down rule for the value of the vacuum cleaner after n offices are cleaned.
c The cleaner has a contract to clean 10 offices per night, 5 nights a week for
40 weeks in a year. What is the value of the vacuum cleaner after one year?

Extended-response questions
1 Kelly bought her current car five years ago for $22 500.

CU
a Kelly assumes a flat-rate depreciation of 12% per annum. Let A be the value of
Kelly’s car after n years.
i Write down the value A of Kelly’s car after n years.
ii Find the current value of Kelly’s car.
b Kelly assumes reducing-balance depreciation at 16% per annum. Let B be the value
of Kelly’s car after n years.
i Write down the value of Kelly’s car after n years.
ii Find the current value of Kelly’s car.
c On the same axes, sketch a graph of the value of Kelly’s car against the number of
years for both flat-rate and reducing-balance depreciation.

2 Meghan has $5000 to invest. Company A offers her an account paying 6.3% per
annum simple interest.
a How much will she have in this account at the end of 5 years?
Company B offers her an account paying 6.1% per annum compound interest,
compounding monthly.
b How much will she have in this account at the end of 5 years?
c Find, correct to one decimal place, the simple interest rate that Company A should
offer if the two investments are to have equal value after 5 years.

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 216 Chapter 4 ■ Arithmetic and geometric sequences
Review

3 An iron ore smelting works has a tall chimney stack from which a pollutant gas is
emitted at a rate of 1500 kilograms per day. New technology has been developed that
enables the emissions to be reduced in stages to a minimum of 200 kilograms per day.
There are two methods of installing new equipment to reduce the emissions.
a Using the first installation method, the emissions will be reduced by a constant
amount each day until the minimum emission of 200 kilograms per day is reached.
Consider the case where the emissions are reduced by 130 kilograms each day. The
installation will be completed by the end of the 10th day, and from the 11th day the
emissions will be 200 kilograms per day. Use this information to complete the table
below.

Day 1 2 3 4 5 6 7 8 9 10
Emission each
1500 1370 1240 … … … … … … 330
day (kilograms)

b Now suppose that the installation is to be completed by the end of the eighth day
so that from the ninth day the emission will be 200 kilograms per day. By what
constant amount must the emission be reduced each day during the installation
period?
c Using the second installation method, the emissions will be reduced by a constant
percentage each day until the minimum emission of 200 kilograms per day is
reached. Consider the case where the constant percentage is 25%. While the
daily emissions are being reduced, the emissions each day will form a geometric
sequence.
i Write down the common ratio of this geometric sequence.
ii Complete the table below, giving the entries correct to two decimal places.

Day 1 2 3 4 5 6 7 8 9 10
Emission each
1500 1125 843.75 … …
day (kilograms)

d In the case described in part c, on which day will the daily emission first reach the
minimum of 200 kilograms, within one kilogram?
e If the case described in part d is used rather than the case described in part a,
how much less, to the nearest kilogram, is the total emission during days 1 to 10
inclusive?
f Now suppose that the second installation method is used, but the minimum daily
emission of 200 kilograms is not reached until the 10th day. By what constant
percentage must the emissions be reduced each day in this case? Give your answer
correct to one decimal place.

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 5
Chapter 5
Earth geometry and time
zones

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 4 Earth geometry and time zones

▶▶ How do we define a great circle?

▶▶ How do we use latitude and longitude to describe a location on
Earth?
▶▶ How do we find the latitude and longitude of a location on
Earth?
▶▶ How do we calculate the distance between two places on
Earth?
▶▶ How do we find time differences between two places on Earth
using time zones?
▶▶ How do we solve problems in time planning associated with
time differences between two places on Earth?

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 218 Chapter 5 ■ Earth geometry and time zones

5A Angle measurement and arc length

We start with a brief section to remind you how to convert angle measurements given in
decimal form to degrees and minutes and vice versa, and how to calculate the length of an arc.
This section will help you to understand and make calculations relating to Earth geometry.

▶▶Conversion of angle measurements

There is a provision to further increase accuracy of angle measurements with a third
measurement of angle, which is seconds, but we will not do this here. Answers will be given
to the nearest minute.
There are 60 minutes in a degree. We write 56 minutes as 56′. To get a feeling for the
conversion consider the following.

■■34.50° = 34°30′
■■34.25° = 34°15′
■■34.75° = 34°45′
Changing from decimal form to degrees and minutes
Multiply the decimal part of the number by 60.

■■For 34.7°, multiply 0.7° by 60. The result is 42′ and we have 34.7° = 34°42′.
■■For 34.321°, multiply 0.321° by 60. The result is 19.26′ and we have 34.321° = 34°19′
to the closest minute.

Changing from degrees and minutes to decimal form

Divide the minutes by 60.

■■For 34°56′, divide 56 by 60. The result is 0.9333… and we have 34°56′ = 34.93°,
correct to two decimal places.
■■ For 54°19′ divide 19 by 60. The result is 0.31666… and we have 54°19′ = 54.317°
correct to three decimal places.

Example 1 Converting angle measurements

a Change 32.45° to degrees and minutes.
b Change 44°32′ to decimal form. Give your answer to 2 decimal places.

Solution
a Multiply the decimal part of the    0.45° = (0.45 × 60) = 27′
number by 60. Therefore, 32.45° = 32°27′.
b Divide the minutes part of the    32′ = (32 ÷ 60) = 0.533…
angle by 60. Therefore, 44°32′ = 44.53°
correct to two decimal places.

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 5A Angle measurement and arc length 219  

Calculator activity 5A Converting angle measurements on a calculator

Solve the following using a calculator.

a. Change 32.45° to degrees and minutes.
b. Change 44°32′ to decimal form.
Casio fx82
a. Type 32.45 press > = to get the degrees and minutes form
To get the result 32.45° = 32°27′
b. Type 44 > > 32 > >=> to get the decimal form
To get the result 44°32′ = 44.533…
TI-30XB
a. Type 32.45 press > [Angle]. Scroll down the list to find > enter
To get the result 32°27′.
b. Type 44 then press > [Angle] > 1 > type 32 > [ Angle] > 2 > enter
To get the result 44.533…
Sharp
a. Type 32.45 press > [ ↔ DEG]
To get the result 32°27′.
b. Type 44, then press > type 32 > > > [ ↔ DEG ]
To get the result 44.533…

▶▶Arc length
Any line segment drawn from the centre of a
given circle to any point on the circle is called
a radius (plural radii). O O
radius diameter
Any line segment joining two points on the
circle and passing through the centre is called   
the diameter of the circle.
A
Any two points on a circle divide the circle into arcs. minor arc
The shorter arc is called the minor arc, the longer is
the major arc.
B
O
major arc

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 220 Chapter 5 ■ Earth geometry and time zones

The arc ACB is said to subtend the angle ∠AOB at the centre of the circle.
If ∠AOB = θ and radius length is r units, then the length of arc ACB will be
a fraction of the circumference.
θ A
The fraction of the circumference will be .
360
Recall that the circumference C of a circle of radius r is given by r

C = 2πr. D O θ° C

Therefore, the length s of an arc that subtends an angle

B
of θ at the centre is:
θ
s= × 2πr
360

Length of an arc
The length, s, of an arc of a circle of radius, r, that subtends an angle of θ at the centre is
given by:
πrθ
s=
180

ww
Example 2 Calculating the length of an arc
A
In this circle, centre O, and radius length 10 cm, the angle 10 cm
subtended at O by arc ACB has magnitude 120°. Find the
length of the arc ACB correct to one decimal place. O 120° C

10 cm

B
Solution
1 Write down the formula for the length πr θ
s=
of an arc. 180
2 Substitute θ = 120° and r = 10 into π × 10 × 120
s=
the equation. 180
20π
=
3
≈ 20.9 cm (correct to one decimal place)

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 5A 5A Angle measurement and arc length 221  

Exercise 5A
Converting angle measurements
Example 1 1 Convert each of the following angle measurements from decimal form to degrees and

SF
minutes.
a 32.45° b 43.20° c 122.46° d 91.12° e 0.75°

2 Convert each of the following angle measurements from degrees and minutes to
decimal form.
a 32°45′ b 15°35′ c 7°22′ d 142°44′ e 67°15′

Calculating the length of an arc

Example 2 3 What is the circumference of each circle? Answer correct to two decimal places.
a Radius of 8 cm
b Radius of 14 m
c Radius of 45 mm
d Diameter of 12 mm
e Diameter of 14 m

4 What fraction of a circle is each sector?

a Angle at the centre is 90° b Angle at the centre is 270°
c Angle at the centre is 30° d Angle at the centre is 120°
e Angle at the centre is 60° f Angle at the centre is 150°

5 Find the arc length of each sector. The radius is 10 cm. Answer correct to two decimal
places.

a Q b C c
  

θ = 45° G
θ = 150°
R
E
F

P B θ = 60° A

d e   f
J
θ = 210° α = 330°
θ = 135° B A
K
H L
I C
M

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 222 Chapter 5 ■ Earth geometry and time zones 5A

6 Find the arc length where the radius of the circle (given in cm) and the angle subtended at
the centre are as given. Give your answer correct to two decimal places.
a r = 15, θ = 50°
b r = 20, θ = 15°
c r = 30, θ = 150°
d r = 16, θ = 135°
e r = 40, θ = 175°
f r = 30, θ = 210°

7 Find the arc length that subtends an angle of magnitude 105° at the centre of a circle
of radius 25 cm.

8 Find the size of the angle subtended at the centre of a circle of radius length 30 cm by
an arc length of:
a 50 cm
b 25 cm

9 A chord of length 6 cm is drawn in a circle of radius 7 cm. Find the length of the

CF
minor arc cut off by the chord.

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 5B Latitude and longitude 223  

5B Latitude and longitude

The Earth can be modelled by a sphere of radius 6371 km.
The radius at the equator is 6378.14 km, but the radius at the poles is only 6356.75 km.
Here we will use the average radius for our calculations of distances on the Earth.

▶▶Elements of Earth geometry

Great circles and small circles
A great circle is the circular boundary of
a cross-section of a sphere that contains a
diameter of the sphere. The cross-section small
contains the centre of the sphere. circles great
circle
The circular boundary of cross-sections of
the sphere that do not contain a diameter
of the sphere are called small circles. The
cross-section for a small circle does not
contain the centre of the sphere.
The great circle shown in the diagram above is in the plane of the equator.

great
s m a l l c i rc l e s
circles
g re a
small circles t c i rc l e s

    

The shortest distance between two points on the surface of the Earth is the distance along
the great circle that passes through those two points.

The great circle path from New Delhi to New York is shown
in the figure to the right.

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 224 Chapter 5 ■ Earth geometry and time zones

Below is a representation of the great circle route from Brisbane to London.

In this section, we are interested in describing the location of points on the surface of
the Earth. We do this in a manner similar to how we described points in the plane with
Cartesian coordinates.
This is done using a grid of lines as shown here. They are used
to give coordinates called latitude and longitude. The red lines
will be used for longitude and the blue lines for latitude.

Meridians and parallels

Meridians of longitude are semi-great circles (an arc that
goes from pole to pole) that pass through the north and south
poles. The red lines on the sphere are meridians of longitude.
Parallels of latitude are small circles whose planes are
parallel to that of the equator. The blue lines in the sphere are
parallels of latitude. The equator is the only latitude that is 60°N
a great circle.
30°N
Latitude
The blue lines in the diagram opposite are parallels 0°N 30°
of latitude. The latitude of a point on a sphere is the
elevation of the point from the plane of the equator. 30°S
■■The equator has latitude 0°N. 60°S
■■The north pole has latitude 90°N.
■■The south pole has latitude 90°S.
In the diagram the latitudes 60°N, 30°N, 60°S and 30°S are shown.

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 5B Latitude and longitude 225  

In the diagram opposite, the Earth has been sliced in north pole
half along a great circle. The vertical line through the 90°N
poles is perpendicular, or at 90°, to the plane of the 60°N 60°N
equator. 30°N 30°N
At the surface of the Earth, at a given latitude, draw a 90°

equator
30°
line from that location to the centre of the Earth. The 0° 0°
angle between this line and the equator is the latitude 60°
90°
measurement. 30°S 30°S
The diagram shows two examples: one for 30°N and 60°S 60°S
one for 60°S. 90°S
south pole
Longitude and the prime meridian
Lines of longitude are measured in degrees east or
west of the prime meridian (0°). The lines of
longitude shown in the diagram opposite are 180°
90°W
0°, 90°E, 180° and 90°W. Note that you don’t
0°
need to add E or W to the 0° or the 180°.
90°E
The prime meridian passes through Greenwich in
England.
The diagram opposite is a diagram of the Earth
looking down from the north pole. The evident 30°E 0°
30°W
plane in the diagram above is the plane of the 60°E 60°W
equator. The angle formed between the prime prime
meridian and the line from the centre of the meridian
90°E 90°W
Earth to the point where the meridian of
longititude meets that plane is the longitude.
120°W
120°E
The meridian 120°W is on the same great circle as north pole
the meridian 60°E. 150°E 180° 150°W

The meridian 30°W is on the same great circle 180° 150°E

as the meridian 150°E. 150°W 120°E
120°W 90°E
This is shown in a different way in the
diagram opposite. 90°W 30°E 60°E
60°W 0°
prim

30°W
em
erid

st °
ian

ea 180
west to
to 180°

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 226 Chapter 5 ■ Earth geometry and time zones

Latitude and longitude

Any point on the Earth’s surface can be described by giving its latitude and longitude.
For example, Brisbane has latitude 27.4698°S and longitude 153.0251°E. Townsville has
latitude 19.2590°S and longitude 146.8169°E. These are called the coordinates of the
location.

Hemispheres
■■Northern hemisphere, the half of the Earth that lies north of the equator. Locations in the
northern hemisphere, such as London, have their latitude described using °N. For London
this is 51.5°N.
■■ Southern hemisphere, the half of the Earth that lies south of the equator. Locations in
the southern hemisphere, such as Brisbane, have their latitude described using °S. For
Brisbane this is 27.5°S.
■■ Western and eastern hemispheres are defined through the prime meridian. Brisbane is in
the eastern hemisphere and New York in the western hemisphere.

▶▶Finding the longitude and latitude of a location

Here is a map of a section of South East Queensland and northern NSW obtained from Google
Maps. By clicking on a location, information is obtained including the latitude and longitude.
(The precise method will depend on your device and browser or app, check Google Maps Help
if needed.) In the diagram of the map below, the details for Toowoomba are shown.

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 5B Latitude and longitude 227  

The coordinates of Toowoomba are given as (−27.544353, 151.932374). Changing this

form to the hemisphere notations is 27.5598°S, 151.9507°E and changing to degrees and
minutes is 27°34′S, 151°57′E. This may be done with any location. Other methods of
finding a location include using a Global Positioning System (GPS) or using an atlas.

GPS
GPS is a system used for worldwide navigation and surveying. It is commonly used for
determining an exact location anywhere on Earth by obtaining the current time at a specific
location. This is made possible by the network of 24 man-made satellites, called GPS
satellites.
The system was used for military purposes, the GPS system became available for use by all
people approximately 30 years ago. GPS provides latitudes and longitudes given to a high
degree of accuracy. For example, through Google Maps you could enter an address and the
GPS coordinates will be given for the place, or vice-versa.

▶▶Distance along a meridian

On a flat surface, the shortest distance between two points is a straight line. Since the
Earth’s surface is curved, the shortest distance between A and B is the arc length AB of
the great circle (the meridian) that passes through A and B. This is called the great circle
distance.
We can calculate the distance between two points on Earth using the difference in their
latitudes. Great circles of Earth have a radius of about 6371 km, so their circumference is
2 × π × 6371 ≈ 40 030 km.

If two points subtend an angle of 1° at the centre of a great circle, the distance between
them is:
1
× 40 030 ≈ 111.2 km
360

Note: This result will be used throughout the chapter.

▶▶Angular distance with respect to a meridian

Beijing (China), and Perth (Australia), have coordinates (40°N, 116°E) and (32°S, 116°E),
respectively. These two cities have the same longitude to the nearest degree. As the cities
are in different hemispheres, north and south, we need to add the latitudes to determine the
angular distance. The angular distance = (40 + 32) = 72°.
For Brisbane and Coffs Harbour, the latitudes are 27°S and 30°S, respectively (to the
nearest degree). As the cities are in the same hemisphere, south, we need to subtract the
latitudes to determine the angular distance. The angular distance = (30 − 27) = 3°. The
cities are in the same hemisphere.

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 228 Chapter 5 ■ Earth geometry and time zones

For locations on the same meridian in different hemispheres, we add the latitudes. For
locations on the same meridian in the same hemisphere, we find the difference between the
latitudes (always subtract smaller from larger).

The distance, D km, between two points on the same meridian is given by:
D = 111.2 × angular distance

Example 3 Finding a distance along a meridian

Beijing (China), and Perth (Australia), have coordinates
(40°N, 116°E) and (32°S, 116°E), respectively.
Calculate the shortest distance between Beijing and
Perth, to the nearest kilometre.

Solution
1 The two cities have the same longitude
correct to the nearest degree. Therefore, Beijing
they are on the great circle that is the
meridian of longitude 116°E. β = 40°
O equator
α = 32°

Perth

2 Add the latitudes of each city to find the Angle = (40 + 32) = 72°
angle subtended at the centre of the arc.
3 As an angle of 1° at the centre of the Therefore, the distance along the meridian
great circle is subtended by 111.2 km on ≈ 111.2 × 72
Earth, calculate the length of the arc by = 8006 km
multiplying the angle measurement by
111.2 km.
Note: The calculated distance given on the internet is 7985 km, which is quite close to our
approximate result.

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 5B Latitude and longitude 229  

Finding the distance along a meridian using a search engine

In a search engine, for example, Google, type ‘Distance from Perth to Beijing’. The shortest
arc along the great circle is shown.

▶▶Distance between two points on the equator

The equator is a great circle and therefore the distance between points on the equator are
possible to find using our knowledge of length of arcs.

Example 4 Finding the distance between two points on the equator

Point A has longitude 30°W and latitude 0°. 0°
30°E 30°W
meridian
prime
Point B has longitude 90°E and latitude 0°. A
60°E 60°W
Find the distance between the two points:
a if you fly east from A to B 90°E B 90°W
north pole
b if you fly west from A to B 120°E 120°W
150°E 150°W
180°

Solution
a 1 F  lying east the angle between the θ = (30 + 90) = 120°
locations is 120°.
2 We can use the formula obtained D = 111.2 × 120
for locations on the same meridian = 13 344 km
because we are on a great circle.
D = 111.2 × angular distance
3 Write the answer in a sentence. Flying east the distance between A and B is
13 344 km.

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 230 Chapter 5 ■ Earth geometry and time zones

b 1 F
 lying west the angle is 240° found θ = (360 − 120) = 240°
by subtracting 120° from 360°.
2 Use the formula to calculate the D = 111.2 × 240
distance between the points. = 26 688 km
D = 111.2 × angular distance
3 Write the answer in a sentence. Flying west the distance between A and B is
26 688 km.

Example 5 Finding a distance between two places on the equator

The cities of Pontianak
(Indonesia), and Quito (Ecuador),
are on the equator to the
nearest degree. The longitude
of Pontianak is 109°E and the
longitude of Quito is 78°W. Find
the distance between the two
cities flying east from Pontianak
to Quito.

Solution
1 Add to find the total angle between the θ = 78 + 109 = 187°
longitudes – we are considering the distance
covered by flying west.
2 Determine the angle between the two Hence, the required angle is
longitudes if flying east. θ = 360 − 187 = 173°
3 Use the formula to calculate the distance D = 111.2 × 173
between Pontianak and Quito if flying east. = 19 238 km
D = 111.2 × angular distance
4 Write the answer in a sentence. The approximate distance when flying east
from Pontianak to Quito is 19 238 km.

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 5B Latitude and longitude 231  

▶▶Distance from a pole or from the equator north pole

All meridians pass through the poles and a point on the equator.
Therefore, you can find the distance from any point on the

meridia
surface of the Earth to a pole or the equator if we know its
latitude.

n
equator

south pole

Example 6 Finding the distance to the equator or a pole

Brisbane has latitude 27°S and longitude 153°E. Find the distance of Brisbane to:
a the equator b the south pole c the north pole

Solution
a 1 Along the plane of the meridian 153°E, the D = 111.2 × 27
difference between the equator and Brisbane is = 3002.4 km
(27 − 0 = 27°). Use the formula
D = 111.2 × angular distance.
2 Write the answer in a sentence. The approximate distance
between Brisbane and the
equator is 3002.4 km.
b 1 Along the plane of the meridian 153°E, the D = 111.2 × 63
difference between the south pole and Brisbane is = 7005.6 km
(90 − 27 = 63°). Use the formula
D = 111.2 × angular distance.
2 Write the answer in a sentence. The approximate distance
between Brisbane and the
south pole is 7005.6 km.
c 1 Along the plane of the meridian 153°E, the D = 111.2 × 117
difference between the north pole and Brisbane is = 13 010.4 km
(90 + 27 = 117°). Use the formula
D = 111.2 × angular distance.
2 Write the answer in a sentence. The approximate distance
between Brisbane and the
north pole is 13 010.4 km.
Note: The distance from the north pole to the south pole along a great circle is approximately
= π × 6371 ≈ 20 015 km.

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 232 Chapter 5 ■ Earth geometry and time zones

▶▶Distance along a parallel of latitude

In the following example, we find out how to find the distance between two points with
the same latitude. We will illustrate this by finding the distance between Rockhampton and
Alice Springs.

Example 7 Calculating distance along a parallel of latitude

Rockhampton, Queensland, has latitude 23°S and longitude 150°E.
Alice Springs, Northern Territory, has latitude 23°S and longitude 134°E.
Find the distance along the parallel of latitude 23°S from Rockhampton to Alice Springs.

Solution
1 In the diagram of the Earth, Alice
Springs and Rockhampton are
shown. The circle passing through
these two cities that is parallel
to the equator is the parallel of O
latitude at 23°S.
Q
Rockhampton
T Alice Springs

2 Find the radius of the small circle Using right-angled triangle OTQ, the radius (QT) of
of latitude 23°S. the small circle of the latitude 23°S is
QT
cos 23° =
6371
QT = 6371 × cos 23°
≈ 5864.54 km

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 5B Latitude and longitude 233  

3 Find the length of the arc The required angle = 150° − 134°
connecting Alice Springs and = 16°
Rockhampton. 16
Distance = × 2 × π × 5864.54
360
= 1637.68
≈ 1638 km
These calculations are always the same for
­calculating distances around small circles so we use
111.2 cos 23 × 16 ≈ 1638.

The distance D km between two points that have the same parallel of latitude is given by
D = 111.2 cos θ × angular distance

where the parallel of latitude is θ °N or θ °S.

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 234 Chapter 5 ■ Earth geometry and time zones

Example 8 Calculating distance along a parallel of latitude

The latitude of both Rockhampton in Queensland and Sao Paolo in Brazil is 23°S. Their
longitudes are 151°E and 47°W, respectively. Find the distance between the two cities:
a by flying west from Rockhampton to Sao Paolo
b by flying east from Rockhampton to Sao Paolo

Solution
a 1  For flying west, add the two angles as Angular distance = (151 + 47) = 198°
they are both measured from either side Latitude = 23°S
of the prime meridian.
2 Calculate the distance between the two D = 111.2 cos 23° × 198
locations using the formula. = 20 267.31 km
3 Write the answer in a sentence. Flying west the distance is 20 267.31 km.
b 1  For flying east, subtract the angle in Angular distance = (360 − 198) = 162°
part a from 360°.
2 Calculate the distance using the formula. D = 111.2 cos 23° × 162
= 16 582.34 km
3 Write the answer in a sentence. Flying east the distance is 16 582.34 km.

Example 9 Calculating distance using degrees and minutes

Yarraden in Queensland and Wyndham in Western Australian both have latitude 15°S.
Yarraden has longitude 143°18′E and Wyndham has longitude 128°07′E. Find the
distance along the small circle between the locations at the latitude 15°S.

Solution
1 Convert the longitudes to decimal notation first. 143°18′E = 143.3°E
2 The two locations are both east of the prime 128°07′E = 128.12°E
meridian. Find the difference between the two
longitudes. Angular difference = 15.18°
3 Calculate the distance using the formula. D = 111.2 × cos 15° × 15.18
= 1630.50 km
4 Write the answer in a sentence. The distance between Yarraden and
Wyndham is 1630.50 km.

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 5B 5B Latitude and longitude 235  

Exercise 5B
Making latitude and longitude calculations
Skillsheet 1 Use an atlas or Google Earth to name the place situated with the following coordinates.

SF
a 44°26′N, 26°06′E (44.43°N, 26.10°E)
b 59°54′N, 10°45′E (59.91°N, 10.75°E)
c 29°55′N, 95°22′W (29.76° N, 95.36°W)
d 1°21′N, 103°49′E (1.35°N, 103.82°E)
e 33°55′S, 18°25′E (33.92°S, 18.42°E)

2 Use an atlas, Google Earth or another method to state the coordinates of:
a Cairo
b Mexico City
c Buenos Aires
d Mumbai
e Lagos
f Harare

3 Use Google maps or an atlas or another method to find the coordinates of each of the
following Queensland locations.
a St George
b Caloundra
c Mackay
d Weipa
e Bundaberg
f Charters Towers
g The Queensland and Northern Territory border (Longitude only)
N
4 On the diagram to the right, the latitude and
longitude of point A are (65°N, 75°E).
a What are the coordinates of point B? B A
b What are the coordinates of point C? Greenwich
meridian 0°
C

S
5 Athens has the coordinates (38°N, 24°E) and Sofia has the coordinates (43°N, 23°E).
a What is the latitude and longitude of a point 20° due south of Athens?
b What is the latitude and longitude of a point 20° due east of Athens?
c What is the latitude and longitude of a point 60° due south of Sofia?
d What is the latitude and longitude of a point 60° due west of Sofia?

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 236 Chapter 5 ■ Earth geometry and time zones 5B

6 The following table shows the latitude and longitude of cities around the world given
to the nearest degree.
City Latitude Longitude
Brisbane 27°S 153°E
Melbourne 38°S 145°E
Cooktown 15°S 145°E
Townsville 19°S 147°E
Marseilles 43°N 5°E
Mexico City 19°N 99°W
Wellington 41°S 175°E
Zurich 47°N 8°E
London 52°N 0°(actually west of Greenwich)
Lima 12°S 77°W
Plymouth 50°N 4°W
Yangon 19°N 96°E

a Which city (or cities) is closest to the following latitudes?

i 15°N ii 28°S
b Which city (or cities) is closest to the following longitudes?
i 151°E ii 20°W
iii Greenwich meridian iv Longitude of Sofia (from Question 5)
c Which cities are in the northern hemisphere?
d Which cities are in the western hemisphere?
e Which cities have the same latitude?
f Which cities have the same longitude?
g Which city is closest to the north pole?
h Which city is closest to the south pole?

Calculating the distance between two points on the same meridian

Example 3, 4 7 Two places on the same meridian have latitudes 22°N and 35°S. Find the distance
between the two places. Give your answer to the nearest kilometre.

8 Cairns 17°S and Melbourne 37.8°S are nearly on the same meridian. Assuming they
are, find the distance between them. Give your answer to the nearest kilometre.

9 How far apart are Esperance 34°S, 122°E and Broome 18°S, 122°E. Give your answer
to the nearest kilometre.

10 Cairns and Griffith are 1920 km apart and both are on the same meridian. If the
latitude of Cairns is 17°S, find the latitude of Griffith. Griffith is south of Cairns.

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 5B 5B Latitude and longitude 237  

11 Calculate the shortest distance along a meridian in each of the following cases. Give
your answer to the nearest kilometre.
a Point X: latitude 10°N, longitude 18°W
Point Y: latitude 45°N, longitude 18°W
b Point X: latitude 14°N, longitude 35°W
Point Y: latitude 13°S, longitude 35°W
c Point X: latitude 23°S, longitude 140°W
Point Y: latitude 67°S, longitude 140°W
d Point X: latitude 15°N, longitude 60°W
Point Y: latitude 25°S, longitude 60°W
e Point X: latitude 15°N, longitude 70°W
Point Y: latitude 15°S, longitude 70°W

Calculating the distance between two points on the equator

Example 4 12 The difference of longitude between two points on the equator is 32°. Find the
distance between them in kilometres.

Example 5 13 There are places in Ecuador (South America), and Somalia (Africa), which are on the
equator. In Ecuador, the longitude of a place X on the equator is 78°W and in Somalia
the longitude of a place Y is 42°W. Find the distance between them in kilometres.

14 Calculate the shortest distance along the equator between places A and B having the
following longitudes:
a A 137°E B 87°E b A 57°E B 13°W
c A 57°W B 27°W d A 140°E B 160°W
e A 95°W B 113°E

15 The distance between two points on the equator is 600 km. What is the difference in
their longitudes?

Finding the distance to the equator or a pole

Example 6 16 New Orleans has latitude 30°N and longitude 90°W. Find the distance of
New Orleans to:
a the equator b the north pole c the south pole

17 Izmir has latitude 38°N and longitude 27°E. Find the distance of Izmir to:
a the equator b the north pole c the south pole

18 Ballarat has latitude 37.5500°S and longitude 143.8500°E. Find the distance of
Ballarat to:
a the equator b the north pole c the south pole

19 Find the distance from the given point to the equator and to each of the poles.
a Latitude 42°N, longitude 134°E b Latitude 55°N, longitude 45°W
c Latitude 15°S, longitude 35°E d Latitude 14°S, longitude 75°W

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 238 Chapter 5 ■ Earth geometry and time zones 5B

Calculating the distance around a parallel of latitude

20 Find the radius of the small circle that is parallel to the latitude:
a 15°S b 30°S c 45°S d 60°S

21 For which parallels of latitude is the radius of the small circle half the radius of the

CF
equator.

Example 7 22 Find the distance around the parallel of latitude for the following locations.

SF
a X: latitude 22°N, longitude 134°E; Y: latitude 22°N, longitude 145°E
b X: latitude 32°S, longitude 50°E; Y: latitude 32°S, longitude 80°E
c X: latitude 12°S, longitude 30°E; Y: latitude 12°S, longitude 80°E

23 The position of Salzburg is 48°N, 13°E and the position of Seattle is 48°N, 122°W.
Find the distance around the 48°N parallel of latitude between Seattle and Salzburg.

Calculations using degrees and minutes

Example 9 24 In the following, each pair of locations lie on the same meridian. Find the approximate
distance between them.
a X(24°15′N), Y(36°35′N) b X(24°15′N), Y(36°45′S)
c X(15°15′S), Y(26°55′N) d X(58°15′S), Y(36°45′S)

25 In the following, each pair of locations lie on the same latitude. Find the approximate
shortest distance between them travelling along the small circle.
a X(124°15′E, 20°15′S), Y(36°45′E, 20°15′S)
b X (104°15′E, 32°25′S), Y(28°45′W, 32°25′S )
c X (120°15′E, 0°25′N), Y(120°45′W, 0°25′N)
d X (158°15′E, 40°45′N), Y(26°45′E, 40°45′N)

Mixed exercises
Example 7 26 An aircraft flies from Bairnsdale (38°S, 148°E) due north to Grenfell NSW
(34°S, 148°E). CF
a How far is this (great circle) distance?
It then flies due west to Renmark SA (34°S, 141°E).
b How far is it from Grenfell to Renmark (distance around the parallel of latitude)?
c What is the total distance flown?

27 An aircraft flies from Warragul (38°S, 146°E) due north to Cairns, Qld (17°S, 146°E).
a How far is this (great circle) distance?
It then flies due west to Derby WA (17°S, 124°E).
b How far is it from Cairns to Derby (distance around the parallel of latitude)?
c What is the total distance flown?

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 5B 5B Latitude and longitude 239  

28 The map shows various regions of Queensland based on language, social or

CU
nation groups of the Indigenous Australians. The lines of latitude show the
parallels of latitude 20°S and 25°S and meridians 145°E and 150°E. Use this
information, other resources and the map to help describe boundary positions of
three chosen regions.

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11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 12 11

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a e J
P New York ARGENTINA
CHILE
Q Vancouver NEW ZEALAND
R Washington DC

12¾
Sun Sun 5 Sun Sun Sun
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 20:00 1:00
11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 12 11

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 5C Time zones and time differences 241  

The time zones are largely determined by the meridians of longitude. You can see from the
map on page 240 that there are exceptions to this because of local requirements.
If it is 12 noon along a meridian, then on the other side of the world along the meridian
that makes up the other half of the great circle it is midnight. For example, when it is noon
in Victoria on the 145°E meridian, it is midnight in the far east of Brazil on the 35°W
meridian.
Since the Earth turns 360° in 24 hours, it turns 15° in 1 hour. For every 15° of longitude,
the time difference is 1 hour, and so for every 1° of longitude the time difference is
4 minutes.

15° longitude = 1 hour time difference

1° longitude = 4 minutes time difference

Local times around the world are given relative to the time along the prime meridian. The
time at the prime meridian is taken as Coordinated Universal Time (UTC). This is not a
time zone but is the primary time standard by which the world regulates clocks and time.
For most purposes, UTC is considered interchangeable with Greenwich Mean Time
(GMT) , but GMT is no longer precisely defined by the scientific community. In the map on
page 240, the time zones show the adjustments to UTC, which are taken in various locations
in the world.
Places east of the prime meridian are ahead of GMT (UTC), while places west are behind
GMT (UTC).

Example 10 Using time difference without time zones or summer time

Singapore is located at 1°N 104°E and Sydney is located at 34°S 151°E. What is the
time difference between Singapore and Sydney?

Solution
1 Calculate the difference in Difference in longitude = 151 − 104 = 47
­longitude.
2
2 Use 1 hour for each 15° of 47 ÷ 15 = 3
15
­longitude.
Therefore, the time difference is 3 hours. Sydney is
three hours ahead.

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 242 Chapter 5 ■ Earth geometry and time zones

▶▶International Date Line

The International Date Line is an imaginary line on Earth’s surface. The International
Date Line is located halfway around the world from the prime meridian (0° longitude) at
about the 180° meridian. The dateline runs from the north pole to the south pole. It is not
straight but zigzags to avoid political and country borders and to not cut some countries in
half. The location of the international dateline is shown in the map below. When you cross
the International Date Line:

■■from west to east, you subtract a day

■■from east to west, you add a day.

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  5C Time zones and time differences 243  

▶▶Time zones for Australia and its neighbours

Australia is divided into three time zones: Eastern Standard, Central Standard and Western
Standard. Some states change the clocks in summer to include daylight saving. Queensland
time is 10 hours ahead of GMT. New Zealand time is ahead of eastern standard time by
2 hours and is 12 hours ahead of GMT.

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 244 Chapter 5 ■ Earth geometry and time zones 5C

Exercise 5C
Using time difference without time zones or summer time
Example 10 1 Give the time differences between the following places.

SF
a X longitude 150°E, Y longitude 120°E
b X longitude 0°, Y longitude 75°W
c X longitude 0°, Y longitude 75°E
d X longitude 123°E, Y longitude 150°E

2 The following table shows the latitude and longitude of cities around the world.

City Latitude Longitude

Brisbane 27°S 153°E
Melbourne 38°S 145°E
Marseilles 43°N 5°E
Mexico City 19°N 99°W
Wellington 41°S 175°E
Zurich 47°N 8°E
London 52°N 0° (actually west
of Greenwich)
Lima 12°S 77°W
Plymouth 50°N 4°W
Yangon 19°N 96°E

a Find the time difference between Brisbane and:

i Wellington ii Marseilles
iii Yangon iv London
v Mexico City
b If it is 6 a.m. in Brisbane what time is it in:
i Wellington? ii Marseilles?
iii Yangon? iv London?
v Mexico City?

3 The time in a Pacific island, is 10 hours behind GMT.

a What is the longitude of the island?
b What is the time in London when it is 4 a.m. on the island?
c What is the time on the island when it is 5:30 a.m. in London?

4 The longitude of Hanoi is 105°E, while the longitude of Cape Howe is 150°E. When
the time in Hanoi is 2:30 p.m., what is the time at:
a Cape Howe? b London?

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 5C 5C Time zones and time differences 245  

5 Kalgoorlie has longitude 121°E while the Pacific island of Nauru has longitude 166°E.
a Calculate the difference in longitude between these two places.
b Calculate the time difference between the two places.
c What is the time in Nauru when it is 11:45 a.m. in Kalgoorlie?

6 You live in Broadbeach (28.0308°S, 153.4319°E) and want to telephone a friend in

one of the places listed below at 9 a.m. on a Saturday (their time). For each city, at
what time (your time) should you call?
a Vancouver (123°W) b Helsinki (25°E)
c Bologna (11°E) d San Francisco (122°W)
e Vladisvostock (132°E) f Fiji (178°E)

Using time zones to solve problems

7 Dimitri is in Athens, which is two hours ahead of Greenwich Mean Time. Allan is in

CF
New York, which is five hours behind Greenwich Mean Time.
a Dimitri is going to ring Allan at 10 a.m. on Wednesday, Athens time. What day and
time will it be in New York when he rings?
b Allan is going to fly from New York to Athens. His flight will leave on Wednesday
at 10 p.m., New York time, and will take 10 hours. What day and time will it be in
Athens when he arrives?

8 Louise is in Dubai, which is three hours ahead of Greenwich Mean Time. David is in
Sydney, which is ten hours ahead of Greenwich Mean Time.
a Louise is going to ring David at 10 a.m. on Wednesday, Sydney time. What day
and time will it be in Dubai when she rings?
b David is going to fly from Sydney to Dubai. His flight will leave on Wednesday
at 10 p.m., Sydney time, and will take 14 hours. What day and time will it be in
Dubai when he arrives?

9 Los Angeles is 8 hours behind GMT and Brisbane is 10 hours ahead of GMT.
a If it is 10 a.m. in Brisbane on Tuesday, what time is it in Los Angeles?
b A plane leaves Brisbane at 10 a.m. on Tuesday and arrives in Los Angeles at 6 a.m.
on Tuesday. What was the length of the flight? (Note that the plane crosses the
International Date Line)
c A plane leaves Los Angeles at 23:20 on Tuesday and arrives in Brisbane at
7:15 a.m. on Thursday. What was the length of the flight? (Note that the plane
crosses the International Date Line)

Using time zones of Australia and its neighbours

10 Use the map on page 240 to answer these questions using the time zones indicated on
SF

the map. Ignore summer time. You may need to find the location in an atlas or using
the internet. If it 12 midday in Brisbane. what time and day is it in:
a Melbourne? b Alice Springs? c Perth?
d Port Moresby? e Auckland? f Norfolk Island?
g Suva? h Honolulu? i Solomon Islands?
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 246 Chapter 5 ■ Earth geometry and time zones
Review

Key ideas and chapter summary

Length of an arc The length s of an arc of a circle of radius r that subtends an
AS angle of θ at the centre is given by
πrθ
s=
180

Great circle A great circle is a section of a sphere that contains a ­diameter

of the sphere. The section contains the centre of the sphere.

Small circles Sections of the sphere that do not contain a diameter are called
small circles. A small circle does not contain the centre of the
sphere.

Meridians of longitude Meridians of longitude are semi-great circles that pass

through the north and south poles.

Parallels of latitude Parallels of latitude are small circles whose planes are ­parallel
to that of the equator.

Australian time zones Australia is divided into three time zones: Eastern Standard,
Central Standard and Western Standard. Some states change the
clocks in summer to include daylight saving.

Skills check
Having completed this chapter, you should be able to:

■■ find the length of an arc of a circle

■■ convert degrees expressed in decimal form to degrees and minutes and vice versa
■■ use the meridians of longitude and parallels of latitude to describe locations on Earth
■■ determine a distance around a parallel of latitude
■■ find the distance around a great circle of two points with the same longitude
■■ relate time zones with longitude.

Multiple-choice questions
1 A great circle on a newly found planet has a circumference of 11 000 km. The
diameter of the planet is closest to:
A 320 km B 300 km C 3500 km
D 250 km E 1100 km

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 Chapter 5 Review 247  

Review
2 The coordinates of two points M and N on the Earth’s surface are (40°N, 40°E) and
(25°S, 55°E). Which statement is most likely to be correct about the time difference?
A M is 5 hours behind N. B M is 1 hour behind N.
C N is 5 hours behind M. D N is 1 hour behind M.
E M is 15 hours ahead of N.

3 Point X on the Earth’s surface has coordinates (29°S, 32°E), while point Y is at
(8°S, 32°E). The distance between X and Y is closest to:
A 2335 km B 750 km C 111 km
D 1350 km E 2010 km

4 X and Y are two towns on the equator. The longitude of X is 18°E and the longitude of
Y is 48°W. Approximately how far apart are these two towns?
A 4000 km B 7400 km C 8500 km
D 10 100 km E 7340 km

5 Trevor lives in Albany, which has a longitude of 118°E. He wants to watch a basketball
game being played in Ottawa, which has a longitude of 76°W. The game starts at
10 p.m. on Wednesday Ottawa time. What is the time in Albany when the game starts?
(Ignore time zones and daylight saving.)
A 9 a.m. on Wednesday B 11 a.m. on Wednesday
C 1 a.m. on Thursday D 9 a.m. on Thursday
E 11 a.m. on Thursday

6 Perth in Western Australia is 8 hours ahead of GMT. Pretoria in South Africa is

2 hours ahead of GMT. What is the time in Pretoria when it is 1 p.m. in Perth?
A 3 a.m. B 7 a.m. C 11 a.m.
D 9 p.m. E 11 p.m.

7 Stockholm has coordinates 59°N, 18°E and Darwin has coordinates 13°S, 131°E.
What is the time difference between Stockholm and Darwin? (Ignore time zones and
daylight saving.)
A 184 minutes B 288 minutes C 452 minutes
D 596 minutes E 620 minutes

Short-answer questions
1 Two locations lie on the same meridian of longitude. One is 30° north of the other.
SF

What is the distance between the two locations, correct to the nearest kilometre?

2 Two locations lie on the same meridian of longitude. One is 35° south of the other.
What is the distance between the two locations, correct to the nearest kilometre?

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 248 Chapter 5 ■ Earth geometry and time zones
Review

3 Dunedin has longitude 170°E, while Albany has longitude 118°E.

a Calculate the difference in longitude between these two places.
b Calculate the time difference between the two places (ignore time zones and
daylight saving).
c What is the time in Dunedin when it is 2:45 a.m. in Albany? (Ignore time zones and
daylight saving.)

4 The position of Rabaul is (4°S, 152°E). An island is 4° to the north of Rabaul and 48°
east of Rabaul. Give the latitude and longitude of the island.

5 Pontianak has a longitude of 109°E, and Amazonas, a town in Brazil, has a longitude
of 70°W. Both places lie on the equator. Find the shortest distance between these two
places. Give you answer to the nearest kilometre.

6 Singapore has longitude 104°E and Sydney has longitude 151°E. What is the time
difference between Singapore and Sydney? (Ignore time zones and daylight saving.)

7 Anthony lives in Rockhampton and wants to phone his grandfather in London. It is

6 p.m. on Saturday in Queenland. What time is it in London? (London GMT +0,
Rockhampton GMT +10)

8 Arlene lives in Townsville and has a baby at 2 a.m. on Saturday. She wants to phone
her mother who is on holiday in Samoa with the good news. What time is it in Samoa
when she calls? (Townsville GMT +10, Samoa GMT +13)

9 Arisa is from Japan and is studying in Brisbane. She plans to phone home on
Sunday night at 8 p.m. What time is it in Tokyo? (Brisbane GMT +10, Tokyo
GMT +9)

10 Terry is playing hockey at a tournament in Buenos Aires. After her team wins the
semi-final at 5 p.m. on Friday, she phones her father in Toowoomba to tell him the
news. What time is it in Toowoomba? (Toowoomba GMT +10, Buenos Aires
GMT –3)

11 Elizabeth is in Rome, which is one hour ahead of Greenwich Mean Time. Leslie is in
CF

Boston, which is five hours behind Greenwich Mean Time.

a Elizabeth is going to ring Leslie at 10 p.m. on Tuesday, Rome time. What day and
time will it be in Boston when she rings?
b Elizabeth is going to fly from Boston to Rome. Her flight will leave on Wednesday
at 10 a.m., Boston time, and will take 10 hours. What day and time will it be in
Rome when she arrives?

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 Chapter 5 Review 249  

Review
12 Osaka is at 34°N, 135°E, and Dallas is at 33°N, 97°W.
a Find the time difference between the two cities. (Ignore time zones.)
b Rex lives in Dallas and wants to ring a friend in Osaka. In Dallas it is 8 p.m.
Monday. What time and day is it in Osaka?
c Rex’s friend in Osaka sent him a text message, which happened to take 14 hours to
reach him. It was sent at 10 a.m. Thursday, Osaka time. What was the time and day
in Dallas when Rex received the text?

Extended-response questions
1 Two locations X and Y have the same latitude 30°S. The longitude of X is 145°E

CU
and the longitude of Y is 130°E. (In this question take the radius of the Earth to be
6400 km.)
a Find the radius of the small circle of the 30°S parallel of latitude.
b Find the distance between X and Y around the parallel of latitude 30°S.
c Find the radius of the great circle through X and Y.
d Find the difference between the distance around the great circle and the distance
around the parallel of latitude. Give answer correct to the nearest km.

2 The Tropic of Cancer is at latitude 23.5°N, while the Tropic of Capricorn is at latitude
23.5°S.
a Calculate the distance between these two tropics along the same great circle
(correct to the nearest km).
b Calculate the radius of the small circles of the Tropic of Capricorn and the Tropic
of Cancer.
c Rockhampton in Queensland and Sao Paulo in Brazil are both on the Tropic of
Capricorn. Rockhampton has longitude 150.5°E and Sao Paolo has longitude
46.5°W. Find the distance around the Tropic of Capricorn from Sao Paolo to
Rockhampton.

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 6
Revision

Chapter 6
Revision of Unit 3
Chapters 1–5

UNIT 3 BIVARIATE DATA, SEQUENCES AND CHANGE, AND

EARTH GEOMETRY

Topic 1 Bivariate data analysis

Topic 2 Time series analysis

Topic 3 Growth and decay in sequences

Topic 4 Earth geometry and time zones

The revision exercises are arranged by chapter with these

categories of questions:
▶▶ Simple familiar question types
▶▶ Complex familiar question types
▶▶ Complex unfamiliar question types
▶▶ Problem-solving and modelling questions

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 6A Topic 1 Bivariate data analysis 251  

Revision
6A Topic 1 Bivariate data analysis
Multiple-choice questions
1 The table below shows the percentage of respondents in three age groups (18–25
years, 26–44 years, 45–60 years) and their response to the question ‘Are you satisfied
with your career choice?’
Age group
Are you ­satisfied with
18–25 26–44 45–60 Total
your career choice?
Yes 65% 45% 60% 57%
No 35% 55% 40% 43%
Total 100% 100% 100% 100%

For the people surveyed, which of the following statements, by itself, supports the
contention that there is an association between satisfaction with career choice and age
group?
A 65% of 18–25-year-olds are satisfied with their career choice, and 35% are not.
B 65% of 18–25-year-olds are satisfied with choice of work and 35% of
18–25-year-olds are not.
C Only 45% of 26–44-year-olds are satisfied with their career choice, much less than
the 60% of 45–60-year-olds, and 65% of 18–25-year-olds who are satisfied.
D 65% of 18–55-year-olds are satisfied with their career choice, more than the 55%
of 26–44-year-olds, and 40% of 45–60-year-olds who are not.
E Overall 57% of respondents are satisfied with their career choice, more than the
43% who are not.

2 The value of r for the scatterplot is closest to:

A 0.8
B 0.5
C 0
D −0.5
E −0.9

3 The association pictured in the scatterplot in the previous

question is best described as:
A strong, positive, linear
B strong, negative, linear
C weak, negative, linear
D strong, negative, non-linear with an outlier
E strong, negative, non-linear

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 252 Chapter 6 ■ Revision of Unit 3 Chapters 1–5
Revision

4 When the correlation coefficient, r, was calculated 25

for the data displayed in the scatterplot, it was found
to be r = −0.64. 20
If the point (1, 5) was replaced with the point (6, 5)
15
and the correlation coefficient, r, recalculated, then
the value of r would be: 10
A unchanged
B positive but closer to 1 5
C negative but closer to 0
D positive but closer to 0 O 1 2 3 4 5 6 7 8
E negative but closer to –1

5 The correlation between computer ownership (number of computers/1000 people) and

car ownership (number of computers/1000 people) in six countries is r = 0.92, correct
to two decimal places.
Based on this information, which of the following statements is not true?
A Computer ownership and car ownership are both numerical variables.
B Around 85% of the variation in computer ownership is explained by car
ownership.
C Either computer ownership or car ownership could be the explanatory variable.
D For these countries, computer ownership increases as car ownership increases.
E For these countries, computer ownership decreases as car ownership increases.

6 The correlation between the score on a maths test and height for a group of primary
school students is found to be 0.7. From this information, it is reasonable to
conclude that:
A learning maths makes children grow taller.
B there is no association between height and maths test scores.
C a child’s maths ability depends only on their height.
D the children who obtained high maths test scores tended to be taller.
E all tall children are better at maths than shorter children.

7 Given that r = 0.675, sx = 2.567 and sy = 4.983, the slope of the least squares
regression line y = a + bx is closest to:
A 0.35 B 0.68 C 1.3 D 1.7 E 3.36

The following data relate to Questions 8 and 9.

Number of hot dogs sold 190 168 146 155 150 170 185
Temperature (°C) 10 15 20 15 17 12 10
We wish to determine the equation of the least squares regression line for the data that
will enable the number of hot dogs sold to be predicted from temperature.

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 6A Topic 1 Bivariate data analysis 253  

Revision
8 The slope of the regression line will be closest to:
A −4.3 B −0.2 C 0.2 D 4.3 E 227

9 The coefficient of determination will be closest to:

A −0.94 B −0.89 C 0.21 D 0.89 E 0.94

The following information relates to Questions 10 to 15.

Eighteen students sat for a 15-question 10
multiple-choice test. In the scatterplot 9
opposite, the number of errors made 8
by each student on the test is plotted

Number of errors
7
against the time they reported studying 6
for the test. 5
A least squares regression line has 4
been determined for the data and
3
is also displayed on the scatterplot.
2
The equation for the least squares
1
regression line is:
0
number of errors = 8.8 − 0.12 × study time 0 10 20 30 40 50 60 70
and the coefficient of determination is Study time (minutes)
0.8198.

10 The least squares regression line predicts that a student reporting a study time of
35 minutes would make:
A 4.3 errors B 4.6 errors C 4.8 errors
D 5.0 errors E 13.0 errors

11 The value of Pearson’s correlation coefficient, r, is closest to:

A −0.91 B −0.82 C 0.67 D 0.82 E 0.91

12 The student who reported a study time of 10 minutes made six errors. The predicted
score for this student would have a residual of:
A −7.6 B −1.6 C 0 D 1.6 E 7.6

13 Which of the following statements that relate to the regression line are not true?
A The slope of the regression line is −0.12.
B The equation predicts that a student who spends 40 minutes studying will make
approximately four errors.
C The least squares regression line does not pass through the origin.
D On average, a student who does not study for the test will make around 8.8 errors.
E The explanatory variable in the regression equation is number of errors.

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 254 Chapter 6 ■ Revision of Unit 3 Chapters 1–5
Revision

14 This regression line predicts that, on average, the number of errors made:
A decreases by 0.82 for each extra minute spent studying.
B decreases by 0.12 for each extra minute spent studying.
C increases by 0.12 for each extra minute spent studying.
D increases by 8.8 for each extra minute spent studying.
E decreases by 8.8 for each extra minute spent studying.

15 Given that the coefficient of determination is 0.8198, we can say that close to:
A 18% of the variation in the number of errors made can be explained by the variation
in the time spent studying.
B 33% of the variation in the number of errors made can be explained by the variation
in the time spent studying.
C 67% of the variation in the number of errors made can be explained by the variation
in the time spent studying.
D 82% of the variation in the number of errors made can be explained by the variation
in the time spent studying.
E 95% of the variation in the number of errors made can be explained by the variation
in the time spent studying.

16 The average rainfall and temperature range at several locations in the South Pacific
region are displayed in the scatterplot opposite.

250
Average rainfall (cm)

200

150

100

50

0
0 2 4 6 8 10 12 14 16 18 20
Temperature range (°C)

A least squares regression line has been fitted to the data, as shown. The equation of
this line is closest to:
A average rainfall = 210 − 11 × temperature range
B average rainfall = 210 + 11 × temperature range
C average rainfall = 18 − 0.08 × temperature range
D average rainfall = 18 + 0.08 × temperature range
E average rainfall = 250 − 13 × temperature range

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 6A Topic 1 Bivariate data analysis 255  

Revision
Short-answer questions
▶▶Simple familiar questions
1 For the following pairs of variables, classify each variable as either categorical or
numerical, and choose which of the following analysis techniques you would use to
investigate the association between them:
••
two-way frequency table
••
scatterplot
••
parallel boxplots

a age (years) and reaction time (seconds)

b sex (males, female) and reaction time (seconds)
c sex (male, female) and reaction time (fast, average, slow)

2 The data in the table below is based on a study of dolphin behaviour. In this study,
the main activities of dolphins observed in the wild were classified as ‘travelling’,
‘feeding’, and ‘socialising’. The time of day was also noted.

Time of observation
Activity Morning Afternoon Evening
Travelling 11.4% 53.3% 16.5%
Feeding 38.0% 6.7% 70.9%
Socialising 50.6% 40.0% 12.6%
Total 100.0% 100.0% 100.0%

a Which is the explanatory variable and which is the response variable?

b Of the dolphins who were observed in the morning, what percentage were feeding?
c Does the information in the table support the contention that the behaviours of
the dolphins are associated with the time of day? Justify your answer by quoting
appropriate percentages.

3 The number of hours spent studying for an examination by each member of a class,
and the marks they received are given in the table:

Student 1 2 3 4 5 6 7 8 9 10
Hours 4 36 23 28 25 11 18 13 4 8
Mark 27 87 67 84 66 52 61 43 38 52

a Which of these variables is the explanatory variable and which is the response
variable?
b On graph paper, construct a scatterplot to display the data.
c Describe the scatterplot.

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4 The following table gives the life expectancies, in years, for males and females across
a group of countries.

Male life Female life

expectancy (years) expectancy (years)
Australia 80.40 84.50
Canada 79.60 83.80
China (People’s Republic of) 74.50 77.50
France 79.20 85.50
India 66.90 69.90
Indonesia 67.00 71.20
Italy 80.30 84.90
Japan 80.80 87.10
Mexico 72.30 77.70
Russia 65.90 76.70
South Africa 55.50 59.50
United Kingdom 79.20 82.80
United States 76.30 81.20

a For these data, calculate the value of the correlation coefficient r, and interpret.
b What assumptions have you made about the relationship between male and female
life expectancies in these countries for the calculation of the correlation coefficient
to be valid?

5 The following table gives the adult heights (in cm) of ten pairs of mothers and
daughters:

Mother 170 163 157 165 175 160 164 168 152 173
Daughter 178 175 165 173 168 152 163 168 160 178

a Identify which variable is the explanatory variable and which is the response variable.
b Construct a scatterplot of the data, and then describe the association between
mother’s height and daughter’s height.
c Calculate the value of the correlation coefficient r, and classify its strength.
d Find the equation of the least squares regression line, and interpret the intercept and
slope.
e Find the value of the coefficient of determination, R2, and interpret in terms of the
variables in this question.
f Estimate the adult height of a girl whose mother is 170 cm tall.
g Is your prediction in part f interpolation or extrapolation? Explain.

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6 The following table shows the daily
Temperature Sales
maximum temperature and the number of
ice-creams sold at a kiosk on the beach over a 18 280
nine-day period: 21 298

The equation of the least squares regression 22 333

line that allows the number of ice-creams sold 24 359
to be predicted from the temperature is: 25 360
sales = 97.2 + 10.3 × temperature 26 355
27 378
32 427
36 465

a Complete the following table of the residuals.

Temperature 18 21 22 24 25 26 27 32 36
Residual −2.6 9.2 14.6 5.3 −10.0 0.2 −3.0

b Construct a residual plot, and comment on the linearity assumption.

7 A marketing firm wanted to investigate the relationship between the number of

times a song was played on the radio (played) and the number of downloads sold the
following week (weekly sales).
The following data was collected for a random sample of ten songs.

Played 47 34 40 34 33 50 28 53 25 46
Weekly sales 3950 2500 3700 2800 2900 3750 2300 4400 2200 3400

a Which is the explanatory variable and which is the response variable?

b Construct a scatterplot of this data.
c Determine the value of the Pearson correlation coefficient, r, for this data.
d Describe the relationship between weekly sales and played in terms of direction,
strength and form and outliers (if any).
e Determine the equation for the least squares regression line and write it down in
terms of the variables weekly sales and played.
f Interpret the slope and intercept of the least squares regression line in the context of
the problem.
g Use your equation to predict the number of downloads of a song when it was
played on the radio 100 times in the previous week.
h In making this prediction, are you interpolating or extrapolating?

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8 The data below shows heights and weights of 35 players listed to play for an AFL team.

Height Weight Height Weight

(centimetres) (kilograms) (centimetres) (kilograms)
174 72 180 80
179 78 178 77
183 85 198 98
193 86 176 69
173 76 181 78
186 85 206 103
188 85 188 81
191 91 184 86
183 80 175 73
187 85 192 92
178 73 185 80
172 70 193 83
188 82 185 77
183 84 185 89
185 83 185 89
189 83 176 76
179 80 192 85
185 83

a In this analysis, which would be the response variable and which would be the
explanatory variable?
b A scatterplot for this data is shown below. Does this support the use of a least
squares regression line to model the relationship between the weight and height of
these footballers? Explain your answer.
110
100
90
Weight

80
70
60
170 180 190 200 210
Height

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c Calculate the least squares regression line for this data and write it in terms of the
variables under investigation.
d What is the slope of the regression line, and what does it tell you in terms of the
problem at hand?
e Why does it not make sense to try to interpret the y-intercept in this problem?
f On average, how much do you expect players who are 195 cm tall to weigh?
g Calculate the value of the coefficient of determination and interpret in terms of
these variables.

▶▶Complex familiar questions

9 A caterer collected the following data on the cost to the company of the preparation of
a differing number of meals.

Number of meals (x) 30 70 90 25 50 60 75 100

Cost in dollars (y) 345 595 720 300 485 530 585 750

a Using the method of least squares regression, find the equation of a straight line
that relates the two variables.
b What is the caterer’s base cost for the standard menu?
c What is the cost of each meal, over and above this base cost?

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10 A regression analysis was conducted to investigate

27.5
the nature of the relationship between femur (thigh

Radius
26.5
bone) length and radius (the short thicker bone in the
forearm) length in 18-year-old males. The bone 25.5
lengths are measured in centimetres. The results of 24.5

42.5
43.5
44.5
45.5
46.5
47.5
this analysis are reported below. In this
investigation, femur length was treated as the Femur
explanatory variable.

Regression equation y = a + bx 0.15

Residual
a = −7.24946 0.00
b = 0.739556 0.15
R2 = 0.975291 −0.30
r = 0.987568

42.5
43.5
44.5
45.5
46.5
47.5
Femur

Based on these analyses, write a report describing the association between femur
length and radius.

11 The following table gives the correlation coefficients between infant mortality rate and
a range of possible explanatory variables for countries across the world.

Mortality rate, infant

(per 1000 live births)
Birth rate per 1000 people r = 0.876
Births attended by skilled health staff (% total) r = −0.714
Exclusive breastfeeding (% of children under 6 months) r = 0.170
Health expenditure per capita (current US$) r = −0.495
Literacy rate, adult female (% of females ages 15 and r = −0.800
above)
Literacy rate, adult male (% of males ages 15 and r = −0.849
above)
People using safely ­managed sanitation ­services (% of r = −0.636
population)
People using safely ­managed drinking water services r = −0.817
(% of population)

a Determine the values of the coefficient of determination for each of these variables.
b Discuss the relative importance of each of the explanatory variables in
understanding infant mortality.

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12 In a large university, students were offered the choice of attending
traditional lectures and tutorials on campus or working independently using
an online method of instruction. The study intentions were recorded for a
random sample of full-time students from three different faculties (Arts,
Business and Science). Researchers suggested that students enrolled in the Arts
faculty would be more likely to select the traditional on campus study than
students from other faculties. Write a report addressing the researcher’s
hypothesis.
Faculties
Arts Science Business Total
Type of On campus 102 128 58 288
instruction 63.8% 64.0% 41.4%
Online 58 72 82 212
36.3% 36.0% 58.6%
160 200 140 500
100% 100% 100%

Extended-response questions
▶▶Complex unfamiliar questions
1 When the Pearson correlation coefficient was calculated 20
for the data displayed in the following scatterplot, it was
15
found to be −0.433, and the slope of the least squares
regression line is −1.8. 10
a If the outlier is removed, what would be the effect on
5
the value the correlation coefficient?
b If the outlier is removed, what would be the effect on 0
the slope (b) of the least squares regression line? 2 4 6 8 10

2 Suppose that the manager of a company determines that the cost of manufacturing a
pair of jeans is:
cost = 12 500 + 22.90 × number of pairs of jeans produced
a What is the marginal cost of manufacturing each pair of jeans?
b What is the cost per pair of jeans if 100 pairs of jeans are produced?
c For the manufacturer to make 75% profit on each pair of jeans, how much should
he sell them each for:
i if 100 pairs of jeans are produced?
ii if 500 pairs of jeans are produced?

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3 a 
A sample of 608 males were asked whether Australia should retain the Queen
or become a republic. Their answers, together with the political affiliation of the
respondent, are summarised in the following two-way frequency table.
Political affiliation
Queen or republic Liberal Labor Total
Definitely keep Queen 74 28 102
Probably keep Queen 60 39 99
Probably become republic 81 78 159
Definitely become republic 47 201 248
262 346 608
Is there a relationship between political affiliation and attitude to the monarchy in
this sample of males? Discuss quoting appropriate percentages.
b A sample of 560 females were asked whether Australia should retain the Queen
or become a republic. Their answers, together with the political affiliation of the
respondent, are summarised as follows.

Political affiliation
Queen or republic Liberal Labor Total
Definitely keep Queen 93 51 144
Probably keep Queen 67 43 110
Probably become republic 49 72 121
Definitely become republic 38 147 185
247 313 560

Is there a relationship between political affiliation and attitude to the monarchy in

this sample of females? Discuss quoting appropriate percentages.
c Is the relationship between political affiliation and attitude to the monarchy the
same for the females as for the males? Discuss.

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4 The following table displays the
Time (seconds) Distance (metres)
distance fallen by an object across
0   0
one-second intervals.
a i   Construct a scatterplot of 1 5.2
the data, with time as the 2 18
explanatory variable and 3 42
distance as the response 4 79
variable. 5 128
ii Determine the equation of the
6 168
least squares regression line for
the data.
iii Construct a residual plot, and comment on the linearity assumption.
b To find a better rule relating time and distance, the science teacher suggested the
student consider (time) 2 as the explanatory variable.
i Complete the following table:

Time (seconds) (Time) 2 Distance (metres)

0   0
1 5.2
2 18
3 42
4 79
5 128
6 168

ii Construct a scatterplot of the data, with (time) 2 as the explanatory variable and
distance as the response variable.
iii Determine the equation of the least squares regression line for the data.
iv Construct a residual plot, and comment on the linearity assumption.

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▶▶Problem-solving and modelling

Revision

5 The table below gives the data pertaining to Australian One Day International cricket
captains.

No. Name Period of Played Won Lost Tied No

captaincy result
1 Bill Lawry 1971 1 1 0 0 0
2 Ian Chappell6 1972–1975 11 6 5 0 0
3 Greg Chappell 1975–1983 49 21 25 0 3
4 Bob Simpson 1978 2 1 1 0 0
5 Graham Yallop 1979 4 2 1 0 1
6 Kim Hughes 1979–1984 49 21 23 1 4
7 David Hookes 1983 1 0 1 0 0
8 Allan Border 1985–1994 178 107 67 1 3
9 Ray Bright 1986 1 0 1 0 0
10 Geoff Marsh 1987–1991 4 3 1 0 0
11 Mark Taylor 1992–1997 67 36 30 1 0
12 Ian Healy 1996–1997 8 5 3 0 0
13 Steve Waugh 1997–2002 106 67 35 3 1
14 Shane Warne 1998–1999 11 10 1 0 0
15 Adam Gilchrist 2001–2007 17 12 4 0 1
16 Ricky Ponting7 2002–2012 229 164 51 2 12
17 Michael Hussey 2006–2007 4 0 4 0 0
18 Michael Clarke 2008–2015 74 50 21 0 3
19 Cameron White 2011 1 1 0 0 0
20 Shane Watson 2012–2013 9 5 3 1 0
21 George Bailey 2013–2015 29 16 10 0 3
22 Steve Smith 2015–present 51 25 23 0 3
23 David Warner 2016 3 3 0 0 0
24 Aaron Finch 2017 2 0 2 0 0
Grand total 911 556 312 9 34

Use the data to investigate the question ‘Who is Australia’s most successful one-day
international cricket captain?’

6 Investigate the association between pulse rate before and after exercise, collecting data as
required. Determine if this association is the same for a range of other variables, such as
sex, age group, or whether or not the subject regularly participates in exercise.

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6B Topic 2 Time series analysis
Multiple-choice questions
1 The pattern in the time series graph
shown is best described as:
A trend
B cyclical, but not seasonal
C seasonal
D random
E average

2 The time series plot shows the

20
share price of two companies
18
over a period of time. 16
From the plot, it can be
Share price ($)
14
concluded that over the 12
period 1990–2000, the 10
8
difference in share price
6
between the two companies 4
has shown: 2
A a decreasing trend
O 1990 1995 2000
B an increasing trend
C seasonal variation Year
D a 5-year cycle
E no trend

Use the information in the table below to answer Questions 3 to 6.

t 1 2 3 4 5 6 7 8 9 10
y 4 5 4 4 8 6 9 10 9 12

3 The three-smoothed mean for t = 2 is closest to:

A 4.3 B 6.2 C 6.4 D 6.5 E 7.25

4 The five-smoothed mean for t = 5 is closest to:

A 4.3 B 6.2 C 6.4 D 6.5 E 7.25

5 The centred two-smoothed mean for t = 6 is closest to:

A 4.3 B 4.75 C 6.25 D 6.5 E 7.25

6 The centred four-smoothed mean for t = 3 is closest to:

A 4.3 B 4.75 C 6.25 D 7.25 E 9.75

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Use the following information to answer Questions 7 and 8.

The long-term quarterly sales figures of a car dealer are shown in the table below.
Also shown are the seasonal indices for the first and second quarters.

Quarter 1 2 3 4
Sales (number) 21 36 49 28
Seasonal index 0.6 1.0

7 The car dealer sells 18 cars in the first quarter of this year. The deseasonalised number
sold is:
A 11 B 13 C 18 D 20 E 30

8 The seasonal index for the fourth quarter is closest to:

A 0.6 B 0.8 C 1.1 D 1.5 E 4.0

Use the information below to answer Questions 9 to 10.

The quarterly sales figures for a soft drink company and the seasonal indices are as
shown.

Quarter 1 2 3 4
Sales ($’000s) 1200 1000 800 1200
Seasonal index 1.1 0.90 0.8

9 The deseasonalised figure (in $’000s) for quarter 3 is:

A 640 B 667 C 800 D 1000 E 1500

10 The seasonal index for quarter 4 is:

A 0.6 B 0.8 C 1.00 D 1.1 E 1.2

11 The deseasonalised sales (in dollars) for June were $91 564. The seasonal index for
June is 1.45.
The actual sales for June were closest to:
A $41 204 B $61 043 C $63 148 D $91 564 E $132 768

12 Sales for a major department store are reported quarterly. The seasonal index for the
third quarter is 0.85. This means that sales for the third quarter are typically:
A 85% below the quarterly average for the year
B 15% below the quarterly average for the year
C 15% above the quarterly average for the year
D 18% above the quarterly average for the year
E 18%below the quarterly average for the year

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13 The seasonal index for headache tablet sales in summer is 0.80.
To correct for seasonality, the headache tablet sales figures for summer should be:
A reduced by 80% B reduced by 25% C reduced by 20%
D increased by 20% E increased by 25%

14 The table below shows the number of broadband users in Australia for the years 2004
to 2008.

Year 2004 2005 2006 2007 2008

Number 1 012 000 2 016 000 3 900 000 4 830 000 5 140 000

A two-point moving mean with centring is used to smooth the time series.
The smoothed value for the number of broadband users in Australia in 2006 is:
A 2 958 000 B 3 379 600 C 3 455 500
D 3 661 500 E 3 900 000

15 A time series for y is shown in the graph, 25

where t represents time. If a linear trend line is
fitted to this data, as shown, then the equation 20
of the line is closest to: 15
A y = 20 − 1.6t
B y = −1.6t 10
C y = 20 + 1.6t
D y = 20 − 0.6t 5
E y = 20 + 0.6t
0
0 1 2 3 4 5 6 7 8 9 10

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Extended-response questions
▶▶Simple familiar questions
1 Construct a time series plot of the number of new vehicles purchased in Queensland in
2016 given in the following table and describe the plot.

Month New vehicle sales

Jan 17 193
Feb 18 711
Mar 21 470
Apr 17 753
May 19 565
Jun 27 270
Jul 18 445
Aug 18 062
Sep 19 702
Oct 16 870
Nov 18 733
Dec 19 252

2 The number of purchases made at a shop over the period of three years from 2016 to
2018 is recorded in the table below.

Number of Summer Autumn Winter Spring

purchases
2016 1380 1627 1840 720
2017 1552 1770 2056 725
2018 1949 1986 2150 990

a Construct a time series graph for this data and describe the plot.
b The seasonal indices for autumn and winter are 1.15 and 1.30.
i Calculate the seasonal index for summer.
ii Hence, find the seasonal index for spring.
c Construct a table to show the number of purchases after deseasonalisation.
d Construct a time series plot the deseasonalised data.
e Determine the equation of the least squares regression line for this time series
(deseasonalised data vs quarter number).

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f Draw the least squares regression line on your scatterplot.
g Interpret the value of the gradient of the least squares regression line in this case.
h Determine the predicted number of purchases for summer 2020.
i Calculate the coefficient of determination for the deseasonalised data for number
of purchases vs time (quarter number). Interpret this result in terms of the variables
involved.

3 The following table gives the annual percentage of young people (aged 15–24) who
were unemployed in Australia for the years 2007–2016.

Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
% youth
9.37 8.82 11.46 11.55 11.38 11.73 12.22 13.32 13.14 12.50
unemployed

a Construct a time series plot of these data.

b Calculate a three-point moving average of the percentage of young people who are
unemployed in Australia.
c Superimpose the moving average on the time series plot of the data.
d Comment on the smoothed graph.

4 The earnings for one particular person over a period of 12 months are as shown.

Month Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Income
5.0 2.6 5.2 6.0 2.4 3.2 0.2 8.4 6.2 3.2 3.6 4.0
$000’s

a Determine the three-point moving mean for March.

b Determine the five-point moving mean for October.
c The seasonal indices for 12 months are shown with the exception of December.

Jan Feb Mar April May June July Aug Sept Oct Nov Dec
1.200 0.672 1.248 1.44 0.576 0.768 0.100 2.016 1.488 0.768 0.864

i Find the seasonal index for December.

ii In the following year the person earns $4200 in January. What is this equivalent
to in deseasonalised terms?

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▶▶Complex familiar question

Revision

5 Average weekly earnings in Australia are reported twice yearly, in May and November.
The following tables give this data for the years 2007–2016.

Average weekly earnings (adult) ($)

May 2007 1124.10
Nov 2007 1151.00
May 2008 1171.50
Nov 2008 1210.80
May 2009 1234.90
Nov 2009 1276.70
May 2010 1300.30
Nov 2010 1328.50
May 2011 1357.90
Nov 2011 1390.50
May 2012 1413.10
Nov 2012 1458.00
May 2013 1482.50
Nov 2013 1500.10
May 2014 1515.80
Nov 2014 1542.40
May 2015 1541.50
Nov 2015 1560.50
May 2016 1573.30
Nov 2016 1595.50

a Construct a time series plot of these data.

b Calculate a centred two-point moving average of the average weekly adult
earnings.
c Use the actual data values to fit a least squares regression line to the data.
d The actual average weekly earnings in May 2017 was reported as $1605.60.
Comment on the accuracy of the prediction obtained for May 2017 using the least
squares regression equation from c.
e Write a report describing how average weekly earnings have changed over the
years 2007–2016.

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 6B Topic 2 Time series analysis 271  

▶▶Complex unfamiliar questions

Revision
6 The following table shows the GDP of Australia since 1980.

Year GDP Year GDP

1980 163.08 1999 411.82
1981 188.59 2000 399.28
1982 187.23 2001 376.93
1983 179.65 2002 424.52
1984 197.33 2003 540.42
1985 174.55 2004 657.43
1986 181.65 2005 734.85
1987 213.31 2006 781.95
1988 271.39 2007 949.15
1989 308.28 2008 1057.11
1990 323.93 2009 997.16
1991 324.59 2010 1249.65
1992 318.14 2011 1504.23
1993 309.64 2012 1561.18
1994 353.22 2013 1509.71
1995 379.78 2014 1449.52
1996 425.59 2015 1229.94
1997 426.66 2016 1261.65
1998 381.10 2017 1390.15

a Construct a time series plot of the data and describe.

b Consider the data for the years 1980–1989.
i Fit a least squares regression model to the data.
ii Use the model to predict for the years 1990, 2000, 2010, 2015, 2017, then
compare them to the actual figures. Using percentage error defined as:
actual − predicted 100
×
predicted 1
iii As a measure of accuracy, comment on the differences between estimated and
actual values and the reliability of your model.

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c Consider the data for the years 2000–2009.

i Fit a least squares regression model to the data.
ii Use the model to predict for the years 2010, 2015 and 2017, then compare them
to the actual figures. Using percentage error defined as:
actual − predicted 100
×
predicted 1
iii As a measure of accuracy, comment on the differences between estimated and
actual values and the reliability of your model.
d Consider the data for the years 1980–2009.
i Fit a least squares regression model to the data.
ii Use the model to predict for the years 2010, 2015 and 2017, then compare them
to the actual figures. Using percentage error defined as:
actual − predicted 100
×
predicted 1
iii As a measure of accuracy, comment on the differences between estimated and
actual values and the reliability of your model.
e Compare your three models and discuss the limitations of each.

▶▶Problem-solving and modelling

7 Investigate the fluctuation in exchange rates between the Australian dollar and other
currencies. Do these relationships have some part in explaining the variation we see in
overseas tourism (both outbound and inbound) from particular countries?

8 Investigate a range of indicators of climate change and how they have changed over
time. Possible indicators include temperature, rainfall, greenhouse gas emissions,
and global snow and ice coverage, but there are many others. Investigate at least two.
Do they tell the same story about climate change?

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6C  Topic 3 Growth and decay in sequences
Multiple-choice questions
1 For the recurrence relation tn+1 − tn = 6 with t1 = 3, the nth term is:
A tn = 6 − 3n B tn = 3 + 3n C tn = 6n − 3
D tn = −3 + 3n E tn = −4 + 7n

2 A car purchased on 1 June 2017 loses value at a reducing-balance depreciation rate of

20% per year. The original purchase price was $65 000. The value of the car on 1 June
2022 will be closest to:
A $32 000 B $22 000 C $26 600
D $21 300 E $17 000

3 The tenth term of the arithmetic sequence 45, 39, 33, 27, … is:
A 18 B 6 C 0 D –6 E –9

4 A population of small marsupials in a particular area is found to be decreasing by 2%

each year. When the population was first counted, there were 8000 small marsupials.
If tn is the marsupials at the beginning of the nth year, then:
A tn = −0.02 × tn−1, where t1 = 8000 B tn = 0.98 × tn−1, where t1 = 8000
C tn = 1.02 × tn−1, where t1 = 8000 D tn = tn−1 + 0.02, where t1 = 8000
E tn = tn−1 − 0.02, where t1 = 8000

5 The following is a geometric sequence 100 000, 90 000, 81 000, 72 900, ...
The common ratio r is equal to:
A –10 000 B 0.1 C –9000 D 0.9 E 1.1

Short-answer questions
▶▶Simple familiar questions
1 For an arithmetic sequence with a = t1 = 6 and d = 5, determine t10.

2 For an arithmetic sequence with a = t1 = 400 and d = –10, determine t10.

3 For a geometric sequence with a = t1 = 10 000 and r = 0.8, determine t5.

4 For a geometric sequence with a = t1 = 2 and r = 3, determine t5.

5 In an arithmetic sequence with t3 = 99 758 and t11 = 98 790, determine t10.

6 Find an expression for the nth term of the arithmetic sequence 500, 475, 450, …

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7 For an arithmetic sequence with rule tn = 8n − 3, write down the values of t1, t2 and t3.

8 For a geometric sequence with rule tn = 2 × 5n–1, write down the values of t1, t2
and t3.

9 An arithmetic sequence has a = t1 = 45 and d = –3. If tn = –39, find the value of n.

10 A sequence is defined by the recurrence relation tn = tn–1 + 11.25, with t1 = 8.

Write down the first three terms.

11 A sequence is defined by the recurrence relation tn = tn–1 − 15, with t1 = 800. Write
down a rule for the nth term of the sequence.

12 A sequence is defined by the recurrence relation tn = 6tn–1, with t1 = 2. Write down a

rule for the nth term of the sequence.

13 You have $200 000 to invest and a bank offers you an interest rate of 2.8% per annum
compounded annually for the duration of the investment. How much would your
investment be worth in eight years time? Give your answer correct to the nearest
dollar.

▶▶Complex familiar questions

14 For an arithmetic sequence t6 = 13 and t10 = 5, find t20.

15 For a geometric sequence t6 = 80 and t10 = 1280, find t4.

16 A car was purchased for $48 000. It depreciates in value at the rate of 8% per year,
using a reducing-balance depreciation method.
a Write down a rule for the value of the car after n years.
b Use this rule to find the value of the car after six years.
c What is the total depreciation of the car over five years? Give you answer to the
nearest dollar.

17 Philip borrows $25 500 from a bank and is charged simple interest at the rate of
16% per annum. Let tn be the value of the loan after n years.
a Write down a rule for the value of the loan after n years.
b How much will Philip need to pay the bank after 3 years?
c How many years does it take the value of the loan to reach $50 000?

18 The cost of hiring a photocopier for a year involves a flat rate of $5000 and then a cost
of 2 cents per copy.
a Write down the cost of hiring the machine for a year where n copies are made.
b How much will it cost if 120 000 copies are made for the year?
c How many copies can be made in a year if no more than $10 000 can be spent on
the hiring the photocopier?

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 6C Topic 3 Growth and decay in sequences 275  

Revision
Extended-response questions
▶▶Complex unfamiliar questions
1 A gardener moves a load of sand used as a foundation for a brick path by emptying
barrow loads of sand in line at points 5 metres apart. The first drop-off point is
20 metres from where the sand was originally dumped.
a Write down a mathematical model of the form:
Ln+1 = Ln + d   where   L1 = a
that can be used to describe this situation. (Ln represents the distance of the nth
drop-off point from the load of sand.)
b Write down an expression for the distance of the nth drop-off point from the load
of sand.
c Calculate the distance of the 10th drop-off point from the load of sand.

2 Wild deer are causing a problem in a nature reserve. Under normal conditions, the deer
population grows at a rate of 22% per year. When counted at the start of the year, there
were 1356 deer in the nature reserve.
a Write down a mathematical model of the form:
Nn+1 = rNn   where   N1 = a
that can be used to describe the growth of the deer population in the nature reserve
under normal conditions. (Nn represents the number of deer in the nature reserve at
the end of the nth year.)
b Use the mathematical model to complete the following table:

End of year 1 2 3 4 5
Number of
deer (Nn)

c Plot a graph of deer numbers against year.

d At the end of which year will the population be in excess of 5000?
e Discuss the reality of the model as the numbers increase.

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 276 Chapter 6 ■ Revision of Unit 3 Chapters 1–5
Revision

3 When purchased new, a machine for manufacturing car components costs $2 500 000.
a Let Vn be the value of the machine at the end of the nth year of its working life
assuming that it depreciates in value by a constant amount of $200 000 per year.
i Write down an expression for the value of the machine after n years.
ii Calculate the value of the machine at the end of each of the first five years of its
working life.
iii Plot these values on a graph.
b Let Un be the value of the machine at the end of the nth year of its working life
assuming that it depreciates in value by 10% of its value each year.
i Write down an expression for the value of the machine after n years.
ii Calculate the value of the machine at the end of each of the first five years of its
working life.
iii Plot these values on a graph.
c From some points of view, the best depreciation method is the one that gives you
the lowest value of the machine at the time of disposal. Which depreciation method
should you use if you plan to keep the machine for:
i two years?
ii 10 years?

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 6D Topic 4 Earth geometry and time zones 277  

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6D  Topic 4 Earth geometry and time zones
Multiple-choice questions
1 City M has latitude 5°N and longitude 5°E. City N has latitude 35°S and longitude 5°E.
The shortest distance along the meridian between M and N, in kilometres, is closest to:
A 4431 B 4448 C 6200 D 3336 E 3580

2 Location A has latitude 25°N and longitude 5°E. Location B has latitude 25°N and
longitude 50°W. The distance along the small circle of the 25°N latitude between
A and B, in kilometres, is closest to:
A 1112 B 5543 C 3833 D 6062 E 11 120

3 The coordinates of two points X and Y on the Earth’s surface are (25°N, 15°E) and
(25°S, 45°W). Which statement is most likely to be correct about the time difference?
A Y is 2 hours behind X. B X is 2 hours behind Y.
C Y is 4 hours ahead of X. D Y is 5 hours behind X.
E X is 4 hours ahead of Y.

4 Catherine lives in Cooktown 145°E. She wants to watch a basketball game in Los
Angeles 118°W starting at 8 p.m. on Friday. What is the closest time in Cooktown to
when the game starts in Los Angeles? (Ignore time zones and daylight saving.)
A 2 a.m. on Friday B 11 p.m. on Friday
C 2 a.m. on Saturday D 9 a.m. on Saturday
E 2 p.m. on Saturday

Short-answer questions
▶▶Simple familiar questions
1 Two locations lie on the same meridian of longitude. One is 37° south of the other.
What is the distance between the two locations, correct to the nearest kilometre?

2 Two locations lie on the same parallel of latitude 15°S. One is 140° west of the other.
What is the distance around the small circle between the two locations, correct to the
nearest kilometre?

3 Vancouver, Canada, has longitude 118°W, while Cooktown has longitude 146°E.
a Calculate the difference in longitude between these two places.
b Calculate the time difference between the two places (Ignore time zones and
daylight saving.).
c What is the time in Cooktown when it is 6 p.m. in Vancouver? (Ignore time zones
and daylight saving.)

4 How far is London (51.5°N, 0.1°W) from the:

a the equator? b the north pole? c the south pole?

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 278 Chapter 6 ■ Revision of Unit 3 Chapters 1–5

▶▶Complex familiar questions

Revision

5 Two locations A and B are situated on the 140°E meridian. Location A is on the 5°S
parallel of latitude and B is north of A. If the distance between the two locations is
3000 km, find the approximation position of location B.

6 Two places are situated on latitude 25°S. If their difference of longitude is 48°, find the
distance between the two places measured along the parallel of latitude.

7 Find the length of the parallel of latitude.

a 27°S b 51°N

8 A plane flies from M(40°N, 40°E) over the north pole to N(40°N, 140°W).
a How far does the plane fly?
b If the plane flies from M to N around the 40°N parallel of latitude, how far is this?
c What is the difference between the distances?

9 A plane flies from a point with longitude 5°E on the equator and flies around the equator
in a westerly direction for 3500 km. Give the approximate location of the plane.

Extended-response questions
▶▶Complex unfamiliar questions
1 Complete the following questions relating to the distance between meridians.
a What is the distance between the 145°E and 150°E meridians at the equator?
b What is the distance between the 145°E and 150°E meridians at the 30°S parallel?
c At what latitude is the distance between 145°E and 150°E meridians 500 km?

2 A plane leaves A(5°N, 5°E).

a If the plane flies south along the 5°E meridian until it reaches the 10°S parallel of
latitude and then flies west along the 10°S parallel of latitude until it reaches the
50ºW meridian, what is the total distance flown? (Final location B(10°S, 50°W)).
b If the plane flies west along the 5°N parallel of latitude until it reaches the
50°W meridian and then flies south along the 50°W meridian until it reaches
the 10°S meridian parallel of latitude, what is the total distance flown? (Final
location B (10°S, 50°W)).
c Find the difference of the two total distances.
d Find the time difference between points A and B. (Ignore time zones and
summertime.)

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 6E List of Unit 3 assessment and examination practice online items 279  

Revision
6E  List of Unit 3 assessment and examination practice
online items
These assessment practice items can be found in the interactive textbook and in the teacher
resources of the online teaching suite.

Interactive Textbook
For student and teacher access:

1 IA1: A practice PSMT from Unit 3 Topics 1–3.

2 IA2: A practice internal exam on Unit 3.

Online Teaching Suite

For teacher access:

1 IA1: A PSMT from Unit 3 Topics 1–3.

2 IA2: An internal exam on Unit 3.

Assessment items for Unit 4, and for Units 3 and 4 together, are listed at the end of
Chapter 13.

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 7
Chapter 7

Compound interest loans

and investments

UNIT 4 INVESTING AND NETWORKING

Topic 1 Loans, investments and annuities

▶▶ How do we construct a recurrence relation model for simple and

compound interest?
▶▶ How do we find the compounding interest rate from a nominal
interest rate?
▶▶ How do we see the difference in value of loans or investments
having different compounding periods?
▶▶ How do we find the effective annual rate of a loan or
investment?
▶▶ How do we find the present and future values of a loan or
investment?

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 7A Sequences and recurrence relations 281  

7A Sequences and recurrence relations

Recurrence relations were introduced in Chapter 4 and will be used extensively to model
compound interest loans and investments in this chapter. They will also be used to model
reducing-balance loans and annuities in later chapters, so it is important to review the
definition of recurrence relations in Section 4A before studying this chapter.

▶▶Recurrence relations
A recurrence relation is a mathematical rule that we can use to generate a sequence. It has
two parts:

1 a starting point: the value of one of the terms in the sequence

2 a rule that can be used to generate successive terms in the sequence.
For example, in words, a recursion rule that can be used to generate the sequence:
10, 15, 20, …
can be written as follows:

1 Start with 10.

2 To obtain the next term, add 5 to the current term and repeat the process.
A more compact way of communicating this information is to translate this rule into
symbolic form. We do this by defining a subscripted variable. Here we will use the variable
An, but the A can be replaced by any letter of the alphabet.
Let An be the term in the sequence after n applications of the rule.
Using this definition, we now proceed to translate our rule written in words into a
mathematical rule.

Starting value Rule for generating the Recurrence relation (two parts:
(n = 0) next term starting value plus a rule)
A0 = 10 An+1 = An + 5 A0 = 10, An+1 = An + 5
next term = current term + 5 starting value rule

Note: Because of the way we defined An, the starting value of n is 0. At the start there have been no
applications of the rule. This is the most appropriate starting point for financial modelling.

The key step in using a recurrence relation to generate the terms of a sequence is to be able
to translate the mathematical recursion rule into words.

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 282 Chapter 7 ■ Compound interest loans and investments

Example 1 Writing a sequence of numbers from a recurrence relation

Write down the first five terms of the sequence defined by the recurrence relation:
A0 = 9, An+1 = An − 4

Solution
1 Write down the starting value A0. A0 = 9
2 Use the rule to find the next A1 = A0 − 4
term, A1. =9−4
=5
3 Use the rule find three more terms. A2 = A1 − 4 A3 = A2 − 4 A4 = A3 − 4
= 5−4 =1−4 = −3 − 4
= 1 = −3 = −7
4 Write your answer. The sequence is 9, 5, 1, −3, −7, …

Example 2 Constructing a recurrence relation

A sequence has starting value 3 and rule ‘triple and then add six’.
Construct a recurrence relation that defines this sequence.

Solution
1 Write down the starting value A0. A0 = 3
2 The rule must be translated into symbolic An+1 = 3 × An + 6
form:
••
triple means the term An is multiplied
by three
••
then add six.
3 Write your answer. The recurrence relation is
A0 = 3, An+1 = 3 × An + 6

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 7A 7A Sequences and recurrence relations 283  

Example 3 Using a calculator to generate sequences from a recurrence relation

A sequence is generated by the recurrence relation A0 = 300, An+1 = 0.5 An − 9.
Use a calculator to generate this sequence and determine how many terms of the
sequence are positive.

Solution
1 Press clear (Casio) or clear (TI) to
­create a blank computation screen.
2 Type 300 and then press = (Casio) or
300
enter (TI).
300
3 Next, type × 0.5 − 9 and then press = Pressing ‘ = ’ or enter once
(Casio) or enter (TI) to generate the
Ans × 0.5 − 9
terms of the sequence. Stop when the
141
first negative term is generated.
Pressing ‘ = ’ or enter again
Ans × 0.5 − 9
61.5

4 Count how many positive terms there The sequence is

are in the sequence. 300, 141, 61.5, 21.75, 1.875, −8.0625, …
5 Write your answer. The first five terms of this sequence are positive.

Exercise 7A
Generating sequences from a rule

1 Use the following starting values and rules to generate the first five terms of the
SF

following sequences recursively by hand.

a Starting value: 2 b Starting value: 5 c Starting value: 1
rule: add 6 rule: subtract 3 rule: multiply by 4
d Starting value: e Starting value: 6 f Starting value: 12
10 rule: divide rule: multiply by 2 rule: multiply by
by 2 then add 2 0.5 then add 3

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 284 Chapter 7 ■ Compound interest loans and investments 7A

2 Use the following starting values and rules to generate the first five terms of the
following sequences recursively using a calculator.
a Starting value: 4 b Starting value: 24 c Starting value: 2
rule: add 2 rule: subtract 4 rule: multiply by 3
d Starting value: 50 e Starting value: 5 f Starting value: 18
rule: divide by 5 rule: multiply by rule: multiply by
2 then add 3 0.8 then add 2

Generating sequences from a recurrence relation

Example 1 3 Without using your calculator, write down the first five terms of the sequences
generated by each of the recurrence relations below.
a W0 = 2, Wn+1 = Wn + 3 b D0 = 50, Dn+1 = Dn − 5
c M0 = 1, Mn+1 = 3Mn d L0 = 3, Ln+1 = −2Ln
e K0 = 5, Kn+1 = 2Kn − 1 f F0 = 2, Fn+1 = 2Fn + 3
g S0 = −2, Sn+1 = 3Sn + 5 h V0 = −10, Vn+1 = −3Vn + 5

Constructing recurrence relations

4 Using your calculator, write down the first five terms of the sequence generated by
each of the recurrence relations below.
a A0 = 12, An+1 = 6An − 15 b Y0 = 20, Yn+1 = 3Yn + 25
c V0 = 2, Vn+1 = 4Vn + 3 d H0 = 64, Hn+1 = 0.25Hn − 1
e G0 = 48 000, Gn+1 = Gn − 3000 f C0 = 25 000, Cn+1 = 0.9Cn − 550

Example 2 5 Write down a recurrence relation that defines each sequence with the starting value
and rule given in Question 2 above.

Exploring sequences and recurrence relations using a calculator

Example 3 6 How many terms of the sequence formed from the recurrence relation
F0 = 150, Fn+1 = 0.6Fn − 12 are positive?

7 How many terms of the sequence formed from the recurrence relation
CF

Y0 = –45, Yn+1 = 0.8Yn + 2 are negative?

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 7B Modelling simple and compound interest situations with recurrence relations 285  

7B Modelling simple and compound interest situations with

recurrence relations
▶▶Mathematical modelling
Mathematical modelling is the process of describing or explaining a real-life situation
using mathematical terms and symbols. The mathematical model that is created can be
used to help us understand the situation clearly, to explore and make predictions about that
situation.
Recurrence relations can be used as a mathematical model for many different situations and
they will be particularly useful to explain or understand financial situations.

Modelling simple interest situations with recurrence relations

Simple interest was introduced in Chapter 4 and will be extended here. Review section 4D,
if necessary, to remind yourself of its basic concepts and skills.
A recurrence relation model can be used to represent simple interest loans and
investments.

Recurrence relation model for simple interest loans and investments

Let An be the value of the loan or investment after n years.
Let x be the annual percentage interest rate for the loan or investment.
Let I be the amount of interest that is charged or earned each year.
The recurrence relation for the value of the loan or investment after n years is:
A0 = principal, An+1 = An + I

x
where I = × A 0.
100

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 286 Chapter 7 ■ Compound interest loans and investments

Example 4 Constructing a recurrence relation model for simple interest

Cheryl deposits $5000 in a bank account that pays simple interest at a rate of 4.8%
each year.
Construct a recurrence relation model for this financial situation.

Solution
1 Define the symbol An in the model. Let An be the amount of money in Cheryl’s
account after n years.
2 Write down the principal amount of A0 = 5000
the investment, A0.
3 Use the annual percentage rate of x = 4.8% per year
­interest to calculate the amount of x
I = × A0
­interest added each year, I. 100
4.8
I = × 5000
100
= 240
4 Write the recurrence relation. A0 = 5000, An+1 = An + 240

The recurrence relation allows us to explore more about this simple interest investment.

Example 5 Using a recurrence relation model to analyse a simple interest

­investment

Cheryl’s investment from example 4 is modelled by the recurrence relation:

A0 = 5000, An+1 = An + 240

a Use this model to determine the value of Cheryl’s investment after three years.
b After how many years will Cheryl’s investment first exceed $6000?

Solution
a 1  Write down the recurrence relation. A0 = 5000, An+1 = An + 240
2 On a clear calculator screen, type 5000 and 5000
press = (Casio) or enter (TI). 5000
3 Type +240 and press = (Casio), or
enter (TI), three times to obtain the value of Ans + 240
Cheryl’s investment after three years. 5240

Ans + 240
5480

Ans + 240
5720

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 7B Modelling simple and compound interest situations with recurrence relations 287  

4 Write your answer. After three years, Cheryl’s investment

has a value of $5720.
b 1  Continue pressing = (Casio) or enter (TI),
Ans + 240
counting how many times you press before
6200
the value is greater than 6000.
2 Write your answer. It takes five years for Cheryl’s ­investment
to exceed $6000. It will have value
$6200.

Decimal interest rates

The interest rate for a compound interest investment or loan is usually given as a percentage
annual rate of interest. When we perform calculations using this percentage rate of interest,
it must be converted to a decimal rate of interest by dividing by 100.

Converting percentage interest rates to decimal interest rates

Let i be the decimal interest rate for the percentage interest rate x% per annum.
x
i=
100

Modelling compound interest situations with recurrence relations

Compound interest was introduced in section 4G as the more usual form of interest,
where any interest that is earned after one time period is added to the principal and then
contributes to the earning of interest in the next time period.
Consider an investment of $5000 that will be paid compound interest at the rate of 8% every
year, or per annum.
Every year the balance of the investment will increase by 8% of the previous year’s balance.
So: balance next year = balance this year + interest earned
= balance this year + 8% of the balance this year
= 100% of the balance this year + 8% of the balance this year
= 108% of the balance this year
= 1.08 × balance this year

Let An be the balance of the investment after n years.

The starting value of the recurrence relation is the principal value of the investment, A0 = 5000.
In recurrence relation symbols, the rule is:
An+1 = 1.08 × An
We now have a recurrence relation that can be used to model the balance of a compound
interest loan or investment.

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 288 Chapter 7 ■ Compound interest loans and investments

A recurrence relation model for a compound interest loan or investment

Let An be the balance of a compound interest loan or investment after n years.
Let i be the annual decimal rate of interest.
A recurrence relation model for the balance of a compound interest investment or loan is:
A0 = principal of loan or investment, An+1 = r × An

where r = 1 + i
The total interest earned or charged after n years = An − A0
The interest earned or charged after the nth year = An − An−1

Example 6 Constructing a recurrence relation model for compound interest

Darren borrows $4000 from a bank. The bank will charge him interest at the annual rate
of 9.8%.
Construct a recurrence relation model for the value of Darren’s loan after n years.

Solution
1 Define the variable of the recurrence Let An be the value of the loan after n years.
­relation.
2 The amount borrowed initially, the principal, A0 = 4000
is the starting value, A0.
3 Calculate the value of r, using the decimal x = 9.8
rate of interest, i. 9.8
i = = 0.098
100
r = 1 + 0.098
r = 1.098
4 Write your answer. The recurrence relation is
A0 = 4000, An+1 = 1.098 × An

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 7B Modelling simple and compound interest situations with recurrence relations 289  

Example 7 Using recurrence relation models for compound interest loans and
investments
The following recurrence relation can be used to model a compound interest loan of
$2000 charged interest at the percentage rate of 7.5% per annum.

A0 = 2000, An+1 = 1.075 × An

In the recurrence relation, An is the balance of the loan after n years.

a Use the recurrence relation to find the balance of the loan after one, two and
three years.
b How much interest in total has been charged after three years?
c How much interest has been charged after the third year?
d Determine when the balance of the loan will first exceed $2500.

Solution
a 1 Write down the principal of the A0 = 2000
loan, A0.
2 Use calculator recursion to apply
2000
the recurrence relation rule and
2000
calculate A1, A2 and A3.
Note: The value after three years must be ans × 1.075
rounded to the nearest cent. 2150

ans × 1.075
2311.25

ans × 1.075
2484.59375

3 Write your answer. After one year, the balance is $2150.00

After two years, the balance is $2311.25
After three years, the balance is $2484.59
b 1 S
 ubtract the principal from the Interest after three years
balance to calculate the total = $2484.59 − $2000
interest charged. = $484.59
2 Write your answer. After three years, a total of $484.59 in interest has
been charged.

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 290 Chapter 7 ■ Compound interest loans and investments

c 1 S
 ubtract the balance after two Interest after third year
years from the balance after three = A3 − A2
years. = $2484.59 − $2311.25
= $173.34
2 Write your answer. After the third year, $173.34 in interest has been
charged.
d Use calculator recursion to count
how many years are required to
reach the balance of $2500.
1 Press = (Casio), or enter (TI),
2000
repeatedly, counting the number
2000
of times before the balance first
exceeds $2500. ans × 1.075
2150

ans × 1.075
2311.25

ans × 1.075
2484.59375

ans × 1.075
2670.938281

2 Write your answer. After 4 years, the balance of the loan will first
exceed $2500.

▶▶Nominal and compounding interest rates

Compound interest rates are usually quoted as an annual rate, or an interest rate per
annum. This rate is called the nominal interest rate for the investment or loan. Sometimes
an annual rate might be quoted, but the interest can be calculated and paid according to a
different time period, such as monthly. The time period after which compound interest is
calculated and paid is called the compounding period.
For example, a compound interest investment may earn interest at the rate of 4.2% per
annum, but if the interest is calculated and added to the balance of the investment after
every month, then the interest is said to compound monthly.

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 7B Modelling simple and compound interest situations with recurrence relations 291  

Annual (nominal) interest rates can be converted to interest rates for other compounding
periods using simple arithmetic.
It must be assumed that there are:

■■12 equal months in every year (even though some months have different numbers
of days)
■■ 4 quarters in every year (a quarter is equal to 3 months)
■■ 26 fortnights in a year (even though there are slightly more than this)
■■ 52 weeks in a year (even though there are slightly more than this)
■■ 365 days in a year (ignore the existence of leap years).

Converting between annual percentage rates of interest and decimal rates of

interest per compounding period
Let x be the nominal annual percentage rate of interest.
Let k be the number of compounds per year.
Let i be the decimal interest rate per compounding period for the loan or investment.
x
i=
k × 100
x = k × 100 × i

Example 8 Converting annual interest rates to decimal interest rates per

­compounding period

An investment account will pay interest at the rate of 6.24% per annum.
Convert this to a decimal interest rate, i, if the interest compounds are:
a monthly b fortnightly c quarterly

Solution
6.24
a Divide the interest rate i= = 0.0052
12 × 100
by 12 × 100.
6.24
b Divide the interest rate i= = 0.0024
26 × 100
by 26 × 100.
6.24
c Divide the interest rate i= = 0.0156
4 × 100
by 4 × 100.

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 292 Chapter 7 ■ Compound interest loans and investments

Example 9 Converting decimal interest rates to annual interest rates per

­compounding period

Convert the following decimal interest rates to annual rates.

a 0.0024 (monthly) b 0.015 (quarterly) c 0.00312 (weekly)

Solution
a Multiply the interest rate Annual interest rate = 0.0024 × 12 × 100
by 12 × 100. = 2.88% per annum
b Multiply the interest rate Annual interest rate = 0.015 × 4 × 100
by 4 × 100. = 6% per annum
c Multiply the interest rate Annual interest rate = 0.00312 × 52 × 100
by 52 × 100. = 16.224% per annum

The recurrence relation model for compound interest with compounding periods other than
one year can now be written.

A recurrence relation model for a compound interest loan or investment

Let An be the balance of a compound interest loan or investment after n compounding
periods.
Let i be the decimal rate of interest, per compounding period.
A recurrence relation model for the balance of a compound interest investment or loan is:
A0 = principal of loan or investment, An+1 = r × An
where r = 1 + i
The total interest earned or charged after n compounding periods = An − A0
The interest earned or charged after the nth compounding period = An − An−1

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 7B Modelling simple and compound interest situations with recurrence relations 293  

Example 10 Constructing recurrence relation models for compound interest loans

and investments

Diego will invest $7500 and will earn compound interest at the nominal rate of 9.6%
per annum.
Let An be the balance of the investment after n compounding periods.
Construct a recurrence relation to model the balance of Diego’s investment if interest is
compounded:
a yearly b quarterly c monthly

Solution
a 1 Calculate the decimal rate of 9.6
i= = 0.096 (one compound per year)
­interest per year. 1 × 100
2 Calculate the value of r. r = 1 + 0.096
= 1.096
3 Write the recurrence relation. A0 = 7500, An+1 = 1.096 × An
b 1 Calculate the decimal rate of 9.6
i= = 0.024 (four compounds per year)
interest per quarter. 4 × 100
2 Calculate the value of r. r = 1 + 0.024
= 1.024
3 Write the recurrence relation. A0 = 7500, An+1 = 1.024 × An
c 1 Calculate the decimal rate of 9.6
i= = 0.008 (twelve compounds per year)
interest per month. 12 × 100
2 Calculate the value of r. r = 1 + 0.008
= 1.008
3 Write the recurrence relation. A0 = 7500, An+1 = 1.008 × An

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 294 Chapter 7 ■ Compound interest loans and investments 7B

Exercise 7B
Constructing recurrence relation models for simple interest

Example 4 1 Construct a recurrence relation model for the following simple interest investments,

SF
where An is the value of the investment after n years.
a $2000 earning interest at the annual rate of 2.5%
b $6000 earning interest at the annual rate of 4.2%
c $25 000 earning interest at the annual rate of 6.4%

Converting between annual percentage rates of interest and decimal

rates of interest

Example 8 2 Convert the following annual percentage rates of interest to decimal rates of interest
for the given compounding periods.
a 7.2% per annum, compounding monthly
b 11.16% per annum, compounding monthly
c 8.06% per annum, compounding fortnightly
d 13.52% per annum, compounding fortnightly
e 7.6% per annum, compounding quarterly
f 10.44% per annum, compounding quarterly

Example 9 3 Convert the following decimal rates of interest to annual percentage rates of interest
for the given compounding periods.
a 0.0375 (compounding yearly)
b 0.064 (compounding yearly)
c 0.008 (compounding monthly)
d 0.0094 (compounding monthly)
e 0.0153 (compounding quarterly)
f 0.0042 (compounding fortnightly)

Constructing recurrence relation models for compound interest

Example 10 4 Construct a recurrence relation model for the following compound interest loans or
investments, where An is the value of the loan or investment after n years.
a $5000 borrowed and charged interest at the annual rate of 8.4%
b $8500 invested and earning interest at the annual rate of 4.2%
c $26 000 borrowed and charged interest at the annual rate of 12.6%

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 7B 7B Modelling simple and compound interest situations with recurrence relations 295  

5 Construct a recurrence relation model for the following compound interest loans or

CF
Example 10
investments, where An is the value of the loan or investment after n compounding
periods.
a $2000 borrowed and charged interest at the rate of 8.4% per annum, compounding
monthly.
b $24 000 invested and earning interest at the rate of 7.68% per annum,
compounding monthly.
c $16 000 borrowed and charged interest at the rate of 6.72% per annum,
compounding quarterly.
d $2800 invested and earning interest at the rate of 4.96% per annum, compounding
quarterly.
e $34 000 invested and earning interest at the rate of 9.36% per annum,
compounding weekly.
f $18 000 borrowed and charged interest at the rate of 12.48% per annum,
compounding weekly.

Problem-solving and modelling

Example 5 6 The following recurrence relation can be used to model a simple interest investment of

SF
$2000 earning interest at the rate of 3.8% per annum.
A0 = 2000, An+1 = An + 76
In the recurrence relation, An is the value of the investment after n years.
a Apply the recurrence relation to find the value of the investment after 1, 2 and
3 years.
b Use your calculator to determine how many years it takes for the value of the
investment to first be more than $3000.

7 The following recurrence relation can be used to model a simple interest loan of
$7000 being charged interest at the rate of 7.4% per annum.
A0 = 7000, An+1 = An + 518
In the recurrence relation, An is the value of the loan after n years.
a Apply the recurrence relation to find the value of the loan after 1, 2 and 3 years.
b Use your calculator to determine how many years it takes for the value of the loan
to first be more than $10 000.

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 296 Chapter 7 ■ Compound interest loans and investments 7B

Example 7,10 8 An investment of $6000 earns compounding interest at the rate of 5.76% per annum,

CF
compounding monthly.
Let the balance of the investment after n months be An.
A recurrence relation that can be used to model the balance of the investment is shown
below.
A0 = 6000, An+1 = 1.0048 × An
a Apply the recurrence relation to find the balance of the investment after 1, 2 and
3 months.
b How much interest is earned in total after three months?
c How much interest is earned in the second month?
d How many months will it take for the total interest earned to exceed $200?

9 A loan of $8400 is charged compounding interest at the rate of 12.6% per annum,
compounding monthly.
Let the balance of the loan after n months be An.
A recurrence relation that can be used to model the balance of the loan is:
A0 = 8400, An+1 = 1.0105 × An
a Apply the recurrence relation to find the balance of the loan after 1, 2 and
3 months.
b How much interest is charged after the first month?
c How much interest is charged in the second month?
d How much interest is charged in total after three months?
e How many months will it take for the total interest charged to exceed $1000?

10 Wayne has invested $7600 and will earn compound interest at the rate of 6% per
annum, compounding monthly. Let the balance of Wayne’s investment be An after
n months.
a What is the monthly interest rate for Wayne’s investment?
b Construct a recurrence relation model for the balance of Wayne’s investment.
c What is the balance of Wayne’s investment after six months?

11 Jessica has borrowed $3500 and will be charged compound interest at the rate of
CU

8% per annum, compounding quarterly. Let the balance of Jessica’s loan be An after
n months.
a What is the quarterly interest rate for Jessica’s loan?
b Construct a recurrence relation model for the balance of Jessica’s loan.
c If Jessica fully repays her loan after one year, how much money will she need to
repay?
d How much extra interest will Jessica be charged if she waits another year to repay
the loan?

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 7C Investigating compound interest loans and investments 297  

7C Investigating compound interest loans and investments

▶▶Graphs of compound interest
Consider an investment of $5000 earning interest at the rate of 10% per annum.
If this was a simple interest investment, the recurrence relation model would be:
A0 = 5000, An+1 = An + 500.
If this was a compound interest investment, with interest compounding annually, the
recurrence relation model would be:
A0 = 5000, An+1 = 1.1 × An
The recurrence relations can be
Year (n) Balance ­(simple Balance ­(compound
used to calculate the balance of
interest) interest)
each type of investment after
each year. 0 5000.00 5000.00
1 5500.00 5500.00
The table on the right shows
the rounded balances (where 2 6000.00 6050.00
necessary) for both simple interest 3 6500.00 6655.00
and compound interest, after each
4 7000.00 7320.50
year for a period of ten years.
5 7500.00 8052.55
Both investments grow in value
6 8000.00 8857.81
over time. After one year, the
balance is the same, but after 7 8500.00 9743.59
each subsequent year, the 8 9000.00 10 717.94
compound interest investment 9 9500.00 11 789.74
balance is higher than that of the
10 10 000.00 12 968.71
simple interest investment.
A graph can make the difference in the rate of growth of simple and compound interest
investments much clearer to see.
The graph on the following page shows the year number, n, on the horizontal axis and the
balance of the investment on the vertical axis.
Crosses are used to represent the balances of the simple interest investment and dots are
used to represent the balances of the compound interest investment.
Notice that there is very little difference in the balance of both types of investments after
one or two years. As the number of years for the investments increases, the balance of the
compound interest investment grows much larger than the simple interest balance. After
ten years, the compound interest investment has grown to have almost $3000 more than the
simple interest investment.

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 298 Chapter 7 ■ Compound interest loans and investments

The graph of the simple interest investment is a straight line because it grows by a constant
amount each year.
The graph of the compound interest investment curves upwards because it grows by an
amount that increases each year.
Balance

14000

13000

12000

11000

10000

9000

8000

7000

6000

5000

4000

3000

2000

1000

n
0 1 2 3 4 5 6 7 8 9 10

Desmos activity 7C: To investigate and compare the compound interest growth rates for
different loans and investments

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 7C Investigating compound interest loans and investments 299  

▶▶The effect of the compounding period on total interest

Changing the compounding period of a compound interest loan or investment has an effect
on the total interest that is earned or charged.

Investigating the effect of compounding period using recurrence relations

You can use recurrence relations to investigate this change using the investigation below.

i
Investigation 7C-1: Investigating the effect of compounding period using a recurrence
relation

You can use a spreadsheet to investigate this change using the investigation below. There are
instructions for setting up this spreadsheet yourself and a link to the completed spreadsheet
below.
Spreadsheet i
Investigation 7C-2: Investigating the effect of compounding period using a spreadsheet

The effect of changing the compounding period on compound interest

Increasing the number of compounds per year of a reducing balance loan or investment
increases the balance of that loan or investment. For investments, from the viewpoint of the
investor interest should compound as often as possible so that the interest earned is as large
as possible. For loans, From the viewpoint of the borrower interest should compound as
infrequently as possible so that the interest charged is as small as possible.

The effect of changing the compounding period on compound interest

■■ Increasing the number of compounding periods per year will mean more interest is
earned or charged over the same period of time.
■■ For investments, from the viewpoint of the investor interest should compound as often
as possible to maximise total interest.
■■ For loans, From the viewpoint of the borrower interest should compound as
infrequently as possible to minimise total interest.

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 300 Chapter
 7 ■ Compound interest loans and investments

Example 11 Using a spreadsheet or recurrence relation to analyse compounding

periods for loans and investments

a Use the compound interest spreadsheet or a recurrence relation to complete the table below.

Principal: $4000
Annual interest rate: 4.2%
Compounds per year Balance after 1 year
1
2
4
12
52

b If this was an investment that was closed after one year, how much extra interest is
earned by choosing monthly compounds instead of yearly compounds?
c If this was a loan that was paid out after one year, how much interest is saved by
choosing monthly compounds instead of weekly compounds?
Solution
a Use the spreadsheet to complete the table, or
Principal: $4000
use the recurrence relations:
A0 = 4000, An+1 = 1.042 × An
Annual interest rate: 4.2%
(1 compound) Compounds per Balance after
A0 = 4000, An+1 = 1.021 × An year 1 year
(2 compounds) 1 $4168.00
A0 = 4000, An+1 = 1.0105 × An
(4 compounds) 2 $4169.76
A0 = 4000, An+1 = 1.0035 × An 4 $4170.66
(12 compounds) 12 $4171.27
A0 = 4000, An+1 = 1.000807692 × An
(52 compounds) 52 $4171.51
b 1 Extra interest = monthly value − annual Extra interest
value = $4171.27 − $4168.00
= $3.27
2 Write your answer. Compared to yearly compounds, monthly
compounds would earn an extra $3.27 interest.
c 1 Interest saved = weekly value − monthly Interest saved = $4171.51 − $4171.27
value = $0.24
2 Write your answer. Compared to weekly compounds, monthly
compounds would save $0.24 interest.

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 7C 7C Investigating compound interest loans and investments 301  

Exercise 7C
Using a spreadsheet or recurrence relation to analyse compounding
periods for compound interest loans and investments.
Example 11 1 Use a spreadsheet or recurrence relation to complete the tables below. If you use a

CF
recurrence relation, do not fill the last row of the table (52 compounds per year).
a b
Principal: $12 000 Principal: $25 000
Annual interest rate: 5.2% Annual interest rate: 9.4%
Compounds Balance Compounds Balance
per year after 1 year per year after 1 year
1 1
2 2
4 4
12 12
52 52

c d
Principal: $67 500 Principal: $180 000
Annual interest rate: 5.7% Annual interest rate: 3.47%
Compounds Balance Compounds Balance
per year after 1 year per year after 1 year
1 1
2 2
4 4
12 12
52 52

Problem solving and modelling

2 A sum of $12 800 is invested into an account earning compound interest at the rate of
5.8% per annum.
a If there is a choice, should the investor choose weekly compounds or monthly
compounds?
b Use a spreadsheet or recurrence relation to calculate the difference in interest
earned during the first year of investment by monthly and weekly compounds.

3 A sum of $3500 is borrowed from a money lender that charges compound interest at
the rate of 14.8% per annum.
a If there is a choice, should the borrower choose quarterly compounds or
fortnightly compounds?
b Use a spreadsheet or recurrence relation to calculate the difference in interest
charged during the first year of the loan by quarterly and fortnightly compounds.

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 302 Chapter 7 ■ Compound interest loans and investments

7D Effective annual rate of interest

▶▶Defining effective annual rate of interest
As a general principle, the more frequently interest is calculated and added to a compound
interest investment or loan, the more rapidly the value of the investment or loan increases.
The table below compares the value of a $5000 investment earning interest at the nominal
rate of 4.8% per annum with the value of the investment with interest calculated on a
quarterly and monthly basis.

Principal of investment: $5000

Nominal annual interest rate: 4.8%
Value of investment for interest earned at the rate of:
Month 4.8% per annum 1.2% per 0.4% per
quarter month
0 5000.00 5000.00 5000.00
1 5020.00
2 5040.08
3 5060.00 5060.24
4 5080.48
5 5100.80
6 5120.72 5121.21
7 5141.69
8 5162.26
9 5182.17 5182.91
10 5203.64
11 5224.45
12 5240.00 5244.35 5245.35
Total interest
240.00 244.35 245.35
earned*
Effective annual
4.80% 4.89% 4.91%
­interest rate
*Note: The total interest earned is the value of the investment at the end of the year less the
principal.

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 7D Effective annual rate of interest 303  

The table shows that the more frequently interest is calculated and added, the greater the
value of the investment at the end of the year.
When interest is added monthly, the investment earned $245.35 in interest, which is greater
than the $240.00 earned with interest added monthly.
The effective annual rate of interest of a loan or investment is the annual interest rate
that would generate the same amount of interest with one single compound per year as that
generated by the original loan.
For example, the effective annual rate of interest for the investment above with 12
compounds per year (monthly) is the interest rate that would earn $245.25 interest in one
annual compound. This can be calculated by writing the interest amount as a percentage of
the principal value.
240
effective interest rate for 1 compound per year = × 100% = 4.8%
5000
244.35
effective interest rate for 4 compounds per year = × 100% = 4.887%
5000
245.35
effective interest rate for 12 compounds per year = × 100% = 4.907%
5000
An investment with a nominal interest rate of 4.907% per annum with one yearly compound
will earn the same interest ($245.35) as an investment with a nominal interest rate of 4.8%
but with monthly compounds.

▶▶A rule for effective annual rate of interest

The calculations above required the amount of interest earned or charged to be known
before the effective annual rate of interest was calculated. It is possible to use a rule to
calculate the effective annual rate of interest for a loan or investment given the nominal
interest rate and the number of compounding periods per year.

Effective annual rate of interest

A loan with a particular nominal interest rate and number of compounding periods will
generate a certain amount of interest over the course of one year.
The effective annual rate of interest of this loan is the nominal interest rate with one
annual compound that generates the same amount of interest over the course of one year.
Let n be the number of compounding periods in one year.
Let i be the annual decimal rate of interest.
Let ieffective be the effective annual decimal rate of interest for the loan.

(
i n
ieffective = 1+ −1
n)
Note: The annual decimal rate of interest can be converted to an annual percentage rate of interest by
multiplying by 100%.

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 304 Chapter 7 ■ Compound interest loans and investments

Example 12 Comparing loans and investments with effective annual rates of

interest

Brooke would like to borrow $20 000. She is deciding between two loan options:
■■ option A: 5.95% per annum compounding weekly
■■ option B: 6% per annum compounding quarterly.
a Calculate the effective annual rate of interest for each investment.
b Which investment option is the best and why?

Solution Option A Option B

a 1  Write down the n = 52 n=4
values of n for each
loan.
2 Calculate the annual 5.95 6
i= = 0.0595 i= = 0.06
­decimal rate of 100 100
interest
for each loan.

( 52 ) ( 4 )
3 Apply the effective
0.0595 52 0.06 4
­interest rate ieffective = 1 + −1 ieffective = 1 + −1
formula.
= 0.06126... = 0.06136…
4 Convert the ­effective Annual percentage effective rate Annual percentage effective rate
rates to annual = 0.06126... × 100% = 0.06136... × 100%
­percentage rates. = 6.127% = 6.136%
= 6.13% (to two decimal places) = 6.14% (to two decimal places)
b Compare the effective Brooke is borrowing money, so the best option is the one with the
interest rates. lowest effective interest rate. She will pay less interest with option A.
Note: Either the effective decimal interest rate or effective percentage interest rate can be
compared.

The amount of interest charged or earned over a particular time period depends on the
number of compounds within that time period. In a short period of time, the number of
compounds per year has little effect on the total interest charged or earned. Over a long
period of time, however, the number of compounds per year can have a significant effect on
the total interest charged or earned.

Spreadsheet Spreadsheet activity 7D: A spreadsheet calculator for effective annual rate of interest

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 7D Effective annual rate of interest 305  

Example 13 Using a spreadsheet calculator to compare loans or investments

using effective interest

Ronnie has $30 000 to invest. She has the choice of two investment accounts:
■■ Account 1 pays compound interest at 6.2% per annum, compounding monthly.
■■ Account 2 pays compound interest at the rate of 6.05% per annum, compounding
weekly.
Which investment should Ronnie choose?

Spreadsheet Solution
1 Use the effective annual rate of
interest spreadsheet calculator
(or formula) to find the effective
annual rate of interest for
Account 1.

2 Use the effective annual rate of

interest spreadsheet calculator
(or formula) to find the effective
annual rate of interest for
Account 2.

3 Ronnie is investing and so should Account 1 has the higher effective annual rate of ­interest
choose the account that has the (6.379%) compared to Account 2 (6.233%) and so
highest effective annual rate of ­Ronnie will earn more interest with Account 1.
interest.

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 306 Chapter 7 ■ Compound interest loans and investments 7D

Exercise 7D
Calculating effective annual rates of interest
1 Calculate the effective annual rate of interest for the following nominal annual interest

SF
rates and compounding periods. Round your answer to two decimal places.
a 6.2% per annum compounding monthly
b 8.4% per annum compounding daily
c 4.8% per annum compounding weekly
d 12.5% per annum compounding quarterly
e 7.5% per annum compounding every six months

Problem-solving and modelling

2 Brenda invests $15 000 in an account earning nominal compound interest of 4.60%

CF
per annum, compounding quarterly.
a Explain why Brenda would be better off with more frequent compounds per year.
b Calculate the effective annual rate of interest for the current loan with quarterly
compounds, correct to two decimal places.
c Calculate the effective annual rate of interest for this investment with monthly
compounds, correct to two decimal places.
d Explain how these effective annual rates of interest support your answer to part a.

3 Stella borrows $25 000 from a bank and pays nominal compound interest of 7.94% per
annum, compounding fortnightly.
a Explain why Stella would be better off with less frequent compounds per year.
b Calculate the effective annual rate of interest for the current loan with fortnightly
compounds, correct to two decimal places.
c Calculate the effective annual rate of interest for this loan with monthly
compounds, correct to two decimal places.
d Explain how these effective annual rates of interest support your answer to part a.

Example 12 4 Luke is considering a loan of $35 000. His bank has two compound interest rate
options:
A: 8.3% per annum, compounding monthly
B: 7.8% per annum, compounding weekly.
a Calculate the effective annual rate of interest for each of the loan options.
b Calculate the amount of interest Luke would pay in the first year for each of the
loan options.
c Which loan should Luke choose and why?

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 7D 7D Effective annual rate of interest 307  

5 Sharon is considering investing $140 000. Her bank has two compound interest
investment options:
A: 5.3% per annum, compounding monthly.
B: 5.5% per annum, compounding quarterly.
a Calculate the effective annual rate of interest for each of the loan options.
b Calculate the amount of interest Sharon would earn in the first year for each of the
loan options.
c Which investment option should Sharon choose and why?

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 308 Chapter 7 ■ Compound interest loans and investments

7E Solving problems involving compound interest

▶▶A rule for the balance of compound interest loans and
investments
Consider an investment of $2000 that earns compound interest at the rate of 5% per annum,
compounding yearly. If we let An be the balance of this investment after n years, the
following recurrence relation can be used to model this investment:
A0 = 2000, An+1 = 1.05 × An

Using this recurrence relation, we can write out the sequence of terms it generates as
follows:
A0 = 2000
A1 = 1.05 × A0
A2 = 1.05 × A1 = 1.05 (1.05 × A0) = 1.052 × A0
A3 = 1.05 × A2 = 1.05 (1.052 × A0) = 1.053 × A0
A4 = 1.05 × A3 = 1.05 (1.053 × A0) = 1.054 × A0
and so on.
Following this pattern, after n years, the balance of the investment will be An = 1.05n × A0.
Instead of using recurrence relation symbols in this rule, we can use P to represent the
principal amount of the loan (A0) or investment and A to represent the future value of the
loan or investment after n compounding periods (An).
This rule allows the balance of a compound interest loan or investment after any number of
compounding periods to be calculated.

A rule for the future value of compound interest loans and investments
Let A be the future value of a compound interest loan or investment.
Let n the total number of compounding periods.
Let i be the decimal rate of interest per compounding period.
Let P be the principal of the loan or investment.
The future value of the compound interest loan or investment after n compounding
periods is
A = P × (1 + i) n

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 7E Solving problems involving compound interest 309  

Example 14 Using the rule for the future value of compound interest loans
and investments

Bongile would like to invest $25 000 into an account that will pay her compound interest
at the rate of 4.2% per annum, compounding monthly.
What is the balance of Bongile’s investment after 10 years?

Solution
1 Write down the value of P = 25 000
P and i. 4.2
i=
12 × 100
= 0.0035
2 Calculate the number of ­compounding n = 10 × 12 months
periods in the time of the loan, n. = 120 months
3 Apply the rule to find the future value, A. A = P × (1 + i) n
A = 25 000 × (1 + 0.0035) 120
= 38 021.14816
4 Write your answer, rounded to the The balance of Bongile’s investment is
nearest cent. $38 021.15 after 10 years of investment.

The compound interest rule above can be algebraically rearranged into alternate forms.
These forms allow the calculation of the principal amount of the loan or investment and the
annual percentage interest rate of the loan or investment.

Rule for the principal and interest rates of compounding interest loans and
investments
Let A be the future value of a compound interest loan or investment.
Let n the total number of compounding periods.
Let i be the decimal rate of interest per compounding period.
Let P be the principal of the loan or investment.
The principal of the compound interest loan or investment is:
A
P=
(1 + i) n
The decimal interest rate per compounding period for the loan or investment is:

(P)
1
A n
i= −1

Note: The decimal interest rate per compounding period, i, can be converted to a percentage rate per
compounding period by multiplying by 100 and then to an annual percentage rate by ­multiplying by
the number of compounds per year.

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 310 Chapter 7 ■ Compound interest loans and investments

Example 15 Using the rule for the principal of compound interest loans and
investments

Lowanna has been offered the opportunity to invest some money. She will earn ­interest
at the annual percentage interest rate of 9% per annum, compounding quarterly.
Lowanna would like to have at least $15 000 in her investment after 4 years.
How much should Lowanna invest in order to achieve this goal? Round your answer to
the nearest dollar.
Solution
1 Write down the values of n and i n = 4 × 4 quarters
= 16 quarters
9
i= = 0.0225
4 × 100
2 The future value is the amount of A = 15 000
Lowanna’s savings goal.

3 Apply the rule to find the value of P.

15 000
P=
(1 + 0.0225) 16
P = 10 506.98693
4 Write your answer, rounding to the In order to have a balance of $15 000 after
nearest dollar. 4 years, Lowanna should invest $10 507 now.

Example 16 Using the rule for the annual percentage interest rate of compound
interest loans and investments

Daaruk has $35 000 to invest now and would like this investment to grow to at least
$45 000 over a period of six years.
If Daaruk’s investment earns interest that compounds monthly, what is the minimum
annual percentage interest rate that he would require in order to achieve his savings goal?
Round your answer to one decimal place.
Solution
1 Write down the value of P, n and A. P = $35 000
n = 6 × 12 months = 72 months
A = $45 000

( P)
2 Apply the rule to find the annual 1
A n −1
­percentage rate of interest. i=

( 35 000 )
1
45 000 72
i= −1
i = 0.003496...

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 7E Solving problems involving compound interest 311  

3 Convert i to an annual percentage Annual percentage interest rate

interest rate. = 0.003496 × 12 × 100
= 4.19589 ...
4 Write your answer rounded to one Daaruk would need an annual percentage interest
decimal place. rate of 4.2% to achieve his savings goal.

▶▶Solving compound interest problems using technology

Compound interest calculations involve five different values:

■■Principal
■■Annual interest rate
■■Number of compounds per year
■■Future value after n compounds
■■n, the total number of compounding periods.
If any four of these values are known, the fifth can be calculated using technology such as a
spreadsheet.
Spreadsheet Spreadsheet activity 7E: A spreadsheet compound interest calculator

▶▶Using the compound interest calculator spreadsheet

The Compound Interest Calculator spreadsheet is shown here.
Click the ‘Clear’ button before every calculation.
Enter the four known quantities into the orange box.
Click the ‘calculate’ button next to the quantity that you want to find. It will appear in the box.
Spreadsheet

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 312 Chapter 7 ■ Compound interest loans and investments

Example 17 Solving compound interest problems using a spreadsheet

The balance of Ahmet’s investment account is $15 480.03 after a period of 2 years.
His initial investment was $12 000. If compound interest is calculated and added to the
account monthly, what is the annual percentage interest rate for Ahmet’s investment?
Round your answer to one decimal place.
Solution
1 Identify the known Principal = $12 000
quantities. Balance = $15 480.03
Number of compounds per year = 12 (monthly)
Number of compounds = 2 × 12 months (2 years)
= 24
2 Click ‘Clear’ on the
compound ­interest
spreadsheet and
enter the known
values.
Notes: You do not need
to type the dollar sign
or ­thousands comma.
Cells for dollar values
have currency formatting
applied which includes
them automatically.
3 Click the
­‘Calculate’ ­button
next to annual
interest rate. The
annual ­percentage
­interest rate will
be ­calculated and
entered into the box
for you.

4 Write your The annual percentage interest rate for Ahmet’s investment is 12.8%.
answer, rounding
to one decimal
place.

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 7E 7E Solving problems involving compound interest 313  

Exercise 7E
Using the rule to determine the future value of compound interest loans
and investments
Example 14 1 Use the compound interest rule to determine the balance of the following loans

SF
and investments after the given period of time. Round your answers to the
nearest cent.
a $2500 borrowed for 3 years with compound interest of 3.5% per annum,
compounding yearly.
b $15 000 invested for 4 years with compound interest of 2.8% per annum,
compounding yearly.
c $5800 borrowed for 4 quarters with compound interest of 9.6% per annum,
compounding quarterly.
d $26 000 invested for 60 months with compound interest of 4.6% per annum,
compounding monthly.
e $6400 borrowed for 5 years with compound interest of 8.5% per annum,
compounding weekly.
f $12 500 invested for 6 years with compound interest of 4.7% per annum,
compounding monthly.

Using the rule to determine the principal and interest rate of compound
interest loans and investments
Example 15 2 Use the rule for the principal of compound interest loans and investments to determine
the principal value of the following loans and investments after the given period of
time. Round your answers to the nearest cent.
a An investment earning compound interest at the rate of 6.9 % per annum,
compounding quarterly, with a future value of $14 692.82 after 8 years.
b A loan charged compound interest at the rate of 12.6% per annum, compounding
quarterly, with a future value of $34 821.06 after 3 years.
c An investment earning compound interest at the rate of 4.2% per annum,
compounding monthly, with a future value of $43 162.90 after 5 years.
d A loan charged compound interest at the rate of 14.5% per annum, compounding
monthly, with a future value of $7944.62 after 18 months.
e An investment earning compound interest at the rate of 3.8% per annum,
compounding weekly, with a future value of $33 446.91 after 2 years.

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 314 Chapter 7 ■ Compound interest loans and investments 7E

Example 16 3 Use the rule for the annual percentage interest rate of compound interest loans and
investments to determine the interest rate for the following loans and investments after
the given period of time. Round your answers to two decimal places.
a An investment of $2000.00 earning compound interest that compounds quarterly
and with a future value of $2560.67 after 6 years.
b An investment of $8500.00 earning compound interest that compounds quarterly
and with a future value of $10 198.86 after 3 years.
c An investment of $50 000.00 earning compound interest that compounds monthly
and with a future value of $63 828.57 after 4 years.
d An investment of $15 000 earning compound interest that compounds monthly and
with a future value of $33 059.63 after 15 years.
e An investment of $45 000 earning compound interest that compounds weekly and
with a future value of $52 153.57 after 3 years.

Problem-solving and modelling with the aid of technology

Example 17 4 Sarah invested $3500 at 6.75% per annum, compounding annually. After how many

CF
years will the value of Sarah’s investment first exceed $5000?

5 Tenile invested $20 000 that has grown to a balance of $21 522.15 after 18 months
with interest compounding monthly. Determine the percentage annual interest rate for
Tenile’s investment. Round your answer to two decimal places.

6 How long will it take $2000 to exceed $20 000 if it was invested at a compound
interest rate of 4.75% per annum, compounding annually?

7 If $45 000 was invested in a compound interest account earning interest at the rate of
6.8% per annum, compounding quarterly, how many quarters would it take for the
balance of the investment to exceed $100 000?

8 Suppose that an investment of $1000 has grown to $1601.03 after 12 years. If this
investment earned compound interest at the rate of i% per annum compounding
yearly, what is the value of i? Round your answer to two decimal places.

9 Jannie invested $25 000 in an account earning compound interest at the rate of i% per
annum, compounding monthly. Jannie’s investment had a balance of $29 216.11 after
30 months. Calculate the value of i. Round your answer to two decimal places.

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 Chapter 7 Review 315  

Review
Key ideas and chapter summary

Sequence A sequence is a list of numbers or symbols written in

AS ­succession. For example: 5, 15, 25, …

Term Each number or symbol that makes up a sequence is called a

term.

Recurrence relation A relation that enables the value of the next term in a sequence
to be obtained by one or more current terms. Examples include
‘to find the next term, add two to the ­current term’ and ‘to find
the next term, multiply the ­current term by three and subtract
five’.

Mathematical Mathematical modelling is the use of mathematical terms and

modelling symbols to describe or explain real-life situations. Recurrence
relations can be used as models for many ­different real-life
situations, including financial situations.

Interest The fee that is added to a loan or the payment received for
investing money is called the interest.

Principal The principal is the initial amount that has been invested or
borrowed.

Simple interest When a fixed amount of interest is added to a loan or investment

at regular time intervals, the interest is called simple interest.

Compound interest When interest is added to a loan or investment and then contrib-
utes to earning more interest, the interest is called compound
interest.

Compounding period The time period for the calculation of interest is called the
compounding period. Compounding periods are ­usually daily,
fortnightly, monthly, quarterly, six-monthly or ­annually.

Decimal rate of interest If x is the annual percentage rate of interest, and if k is the num-
per compounding ber of compounding periods per year, then the decimal rate of
period interest per compounding period is
x
i=
k × 100

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 316 Chapter 7 ■ Compound interest loans and investments
Review

Recursive model for A recurrence relation that can be used to determine the balance
­compound interest of a compound interest loan or investment after n compounding
periods.
If the number of compounding periods per year is k, and if the
annual percentage interest rate is i, then the recursive model for
the loan or investment is
A0 = principal of loan or investment, An+1 = r × An
where r = 1 + i

Nominal interest rate The annual percentage interest rate for a loan or investment is
called the nominal interest rate.

Effective annual rate of The effective annual rate of interest ieffective is used to compare
interest the interest paid on loans or investments with different nominal
rates of interest and compounding periods.
If the number of compounding periods per year is k, then the
annual decimal rate of interest is
ieffective = (1 + i) k − 1
The annual percentage rate of interest is
ieffective = ( (1 + i) k − 1) × 100%

Future value The future value (A) of a compound interest loan or investment
is the balance of that loan or investment after some number of
compounding periods.

Rule for the future value If P is the principal of the loan or investment, i is the decimal
of a compound interest rate of interest per compounding period, then the future value of
loan or investment the loan after n compounding periods is:

A = P × (1 + i) n

Rule for the principal If A is the future value of a loan or investment and i is the decimal
of a compound interest rate of interest per compounding period, then the principal of the
loan or investment loan or investment after n compounding periods is
A
P=
(1 + i) n

Rule for the decimal If P is the principal of the loan or investment, A is the future
interest rate per com- value after n compounding periods then the decimal interest rate
pounding period of a per compounding period is
compound interest loan

(P)
1

or investment A n
i= −1

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 Chapter 7 Review 317  

Review
Skills check
Having completed this chapter, you should be able to:

■■ construct a recurrence relation model for simple interest

■■ analyse simple interest using a recurrence relation model
■■ construct a recurrence relation model for compound interest
■■ calculate a compounding interest rate from a nominal annual interest rate
■■ calculate a nominal annual interest rate from a compounding interest rate
■■ analyse compound interest using a recurrence relation model
■■ understand and compare the graph of the balance of simple interest and compound
interest loans and investments
■■ understand the effect that the compounding period has on compound interest
■■ calculate the effective annual rate of interest for a given compound interest loan or
investment
■■ compare compound interest loans or investments using the effective interest rate
■■ use a rule to calculate the future value, principal or interest rate of a compound interest
loan or investment
■■ solve compound interest problems using technology (spreadsheet calculation tool).

Multiple-choice questions
1 Which one of the following recurrence relations defines the sequence with starting
value 4 and the rule ‘multiply by 3 and subtract 1’?
A A0 = 1, An+1 = 3An − 4 B A0 = 4, An+1 = 3An − 1
C A0 = 3, An+1 = 4An − 1 D A0 = 4, An+1 = An − 3
E A0 = 1, An+1 = 4An − 3

2 How many terms of the sequence defined by the recurrence relation

A0 = 25, An+1 = 2An − 30 are positive?
A 1 B 2 C 3 D 4 E 5

3 The annual percentage rate of interest for a compound interest loan is 12.6% per
annum, compounding monthly.
The balance of this loan after n months, An, can be modelled by the recurrence relation:
A0 = 4000, An+1 = 1.0105 × An.
If the loan and interest is fully repaid after 5 months, how much in total will be paid?
A $4127.33 B $4170.66 C $4214.46 D $4258.71 E $4303.42

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 318 Chapter 7 ■ Compound interest loans and investments
Review

4 A compound interest investment of principal $12 000 will earn interest at the rate of
10.8% per annum, compounding every six months. Which one of the following is a
recurrence relation model for An, the balance of the investment after n six-month periods?
A A0 = 12 000, An+1 = 1.054 × An B A0 = 12 000, An+1 = 1.108 × An.
C A0 = 12 000, An+1 = 1.15 × An. D A0 = 12 000, An+1 = 1.018 × An.
E A0 = 12 000, An+1 = 10.8 × An.

5 An investment of $50 000 is made at a fixed rate of interest compounding annually

over a number of years. Which graph best represents the value of the investment at the
end of each year?
A B
Amount

Amount
Year Year
C D
Amount

Amount

Year Year

E
Amount

Year
6 Issa has some money to invest and would like to earn as much interest as possible in
the first year of the investment. Which one of the following interest rates should he
choose?
A 3.1% per annum, compounding weekly
B 3.1% per annum, compounding monthly
C 3.2% per annum, compounding quarterly
D 3.2% per annum, compounding monthly
E 3.2% per annum, compounding annually

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 Chapter 7 Review 319  

Review
7 A compound interest investment earns interest that compounds monthly. The balance
of this investment after n months, An, can be found using the recurrence relation:
A0 = 15 000, An+1 = 1.0024 × An.
The balance of the investment can also be found using the rule:
A 1.0024 × (15 000) n B 15 000 × (2.88) n
C 1.0024 × (2.88) n D 15 000 × (1.24) n
E 15 000 × (1.0024) n

8 A principal of $2000 is invested and will earn compound interest at the rate of 5.4%
per annum, compounding quarterly. The effective annual rate of interest for this
investment is closest to:
A 5.2% B 5.3% C 5.4% D 5.5% E 5.6%

9 A compound interest investment earns interest at the rate of 3.6% per annum,
compounding quarterly. If the balance after 4 years is $10 964.33, the principal
investment amount is closest to:
A $6200 B $9500 C $10 400 D $10 600 E $10 800

10 A compound interest investment of $10 000 earns $590.69 interest over a period of
15 months. If interest compounds monthly, the annual percentage rate of interest is
closest to:
A 1.5% B 3.8% C 4.6% D 7.3% E 9.8%

Short-answer questions
1 Eli invested $12 500 into an account that pays compound interest at the rate of 7.8%

SF
per annum, compounding monthly.
a Construct a recurrence relation model for the balance of Eli’s investment after
n months.
b Apply the recurrence relation to determine the balance of Eli’s investment after
4 months.

2 The following recurrence relation can be used to model a compound interest investment
of $5800 earning interest at the rate of 6.72% per annum, compounding monthly.
A0 = 5800, An+1 = 1.0056 × An.
In this recurrence relation, An is the balance of the investment after n months.
a Apply the recurrence relation to find the balance of the investment after one, two
and three months.
b After how many months will the balance of the investment first exceed $6000?

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 320 Chapter 7 ■ Compound interest loans and investments
Review

3 The following recurrence relation can be used to model a compound interest loan. The
interest is calculated and added to the loan weekly.
A0 = 1600, An+1 = 1.0035 × An.
In this recurrence relation, An is the balance of the investment after n weeks.
a What is the principal of this loan?
b Calculate the annual percentage rate of interest.
c Apply the recurrence relation to find the balance of the loan after one, two and
three weeks.
d After how many weeks will the balance of the loan first exceed $1650?

4 Hansie has borrowed $2200 and will be charged compound interest at the rate of
15.2% per annum, compounding quarterly. Let the balance of Hansie’s loan be An after
n quarters.
a What is the quarterly interest rate for Hansie’s loan?
b Construct a recurrence relation that models Hansie’s loan.
c If Hansie fully repays her loan with one payment after the first year, how much
money will she need to repay?

5 Eva borrows $15 000 and will be charged compound interest at the rate of 4.6% per
annum.
a Calculate the balance of the loan after two years.
b What is the total interest that will be charged after two years?

6 Rodney will borrow $1500. He will be charged compound interest at the rate of
11.28% per annum compounding monthly.
a Use the compound interest rule to determine the balance of Rodney’s loan after two
months.
b What is the total interest that has been charged after two months

7 Ilana uses a credit card to buy a dress that costs $300. Interest on this loan will be
compounded monthly. If Ilana does not make any repayments on her credit card, she
will need to repay $323.98 after five months.
Use the compound interest rule to determine the annual percentage interest rate for
Ilana’s credit card. Round your answer to one decimal place.

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 Chapter 7 Review 321  

Review
Extended-response questions
1 Meghan has $5000 to invest.

CF
••
Bank A offers investment accounts that pay interest at the rate of 6.3% per annum
compounding quarterly.
••
Bank B offers investment accounts that pay interest at the rate of 6.1% per annum,
compounding monthly.
a Calculate the effective annual rate of interest for each of these investment accounts.
Round your answers to two decimal places.
b Which investment account should Meghan choose? Justify your answer by
explaining how you compared the two investment options.
c Calculate the extra interest that Meghan will earn in one year by choosing the
investment account in b, compared to the other account. Write your answer to the
nearest dollar.
2 Darius has $25 000 to invest. He has two investment options:
••
Bank A offers to pay 8.2% per annum compounding six-monthly
••
Bank B offers to pay 8.1% per annum compounding quarterly
Darius would like his money to remain invested for a period of 18 months.
a Which of the two investment options would earn Darius the most interest? Justify
your answer by explaining how you compared the two investment options.
b Calculate the difference between the total interest earned by both investment
options. Round your answer to the nearest dollar.
3 Eva invests $15 000 and will earn compound interest at the annual percentage interest
rate of 4.6% per annum.
a Calculate the amount of money Eva has invested after one year if the interest
earned compounds:
i quarterly ii monthly iii weekly
b What financial principle is used to compare the investment conditions in 1a above?
c Write a paragraph to explain to Eva why weekly compounding interest on her
investment will be of most benefit to her.
4 Chi borrowed some money and will be charged compound interest that compounds
weekly. The balance of Chi’s loan after n weeks can be found from the rule
An = 2300 × 1.0034n.
In the following questions, round your answers to the nearest cent.
a What is the principal of Chi’s loan?
b Calculate the annual interest rate for Chi’s loan.
c Find the:
i balance of Chi’s loan after 16 weeks
ii total amount of interest that has been charged after 16 weeks
iii total amount of interest that has been charged after 1 year

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 322 Chapter 7 ■ Compound interest loans and investments
Review

5 A ‘payday loan’ company offers short term loans. Interest on these loans is charged at

CU
the annual percentage interest rate of 12.48%.
Lucille needs $2500 to pay for urgent repairs of her car.
a Complete the following table that shows how much Lucille will have to pay back
after different periods of time and for quarterly and monthly compounding periods.

Month Quarterly Monthly

­compounds c­ ompounds
1
2
3
4
5
6
7
8
9
10
11
12

b
i  Construct a graph that shows the values in the table from question 5a above.
ii Quarterly compounding interest is better for Lucille than monthly compounding
interest.
Describe the features of the table and graph you have drawn in question bi
above that support this statement.
c Lucille will repay the principal and all interest on her loan after one year.
How much extra interest will Lucille pay if she is charged interest that compounds
monthly instead of quarterly?

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 8
Chapter 8
Reducing-balance loans

FPO
UNIT 4 INVESTING AND NETWORKING

Topic 1 Loans, investments and annuities

▶▶ How do we use a recursive model for a reducing-balance loan?

▶▶ How do we set up and interpret a repayment schedule for a
reducing-balance loan?
▶▶ How do we find the effect of the repayment amount on a
reducing-balance loan?
▶▶ How do we find the effect of a lump sum repayment on a
reducing-balance loan?
▶▶ How do we analyse reducing-balance loans using a
spreadsheet?
▶▶ How do we determine the balance of a reducing-balance loan
after a certain amount of time?

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 324 Chapter 8 ■ Reducing-balance loans

8A A recursive model for reducing-balance loans

▶▶Reducing-balance loans
In the compound interest loans from Chapter 7, a principal amount of money was borrowed,
interest was calculated and charged at regular compounding time periods and then the
money was paid back, along with any interest charged, at the end of the loan.
In practice, it is very unusual for a borrower to wait until the end of the loan to repay the
principal and interest to the bank. Instead, loans are usually repaid by making regular
repayments that coincide with the compounding time periods. This has the effect of
gradually reducing the balance of the loan over time, until it is fully repaid.
This kind of loan is called a reducing-balance loan. Home loans and other personal loans
are examples of reducing-balance loans.

▶▶A recursive model for a reducing-balance loan

Consider a reducing-balance loan for $5000 that is charged interest at the rate of 8% per
annum, compounding yearly. Repayments of $1500 will be made each year.
Let An be the balance of the loan after n years.
The starting value of the recurrence relation is the principal value of the loan, A0 = 5000.
Each year, the loan balance increases by the amount of interest charged, that is 8% of the
previous balance, and then reduces by the amount of the repayment
So: balance next year = balance this year + interest charged − repayment
= balance this year + 8% of the balance this year − repayment
= 100% of the balance this year + 8% of the balance this year
− repayment
= 108% of the balance this year − repayment

In recurrence relation symbols: An+1 = 1.08 × An − 1500

We now have a recurrence relation that can be used to model the balance of a reducing-
balance loan for differing compounding periods.

A recurrence relation model for a reducing-balance loan

Let An be the balance of a reducing-balance loan after n compounding periods.
Let n be the total number of compounding periods.
Let i be the decimal interest rate per compounding period.
Let R be the repayment amount per compounding period.
A recurrence relation model for the balance of a reducing-balance loan is:
A0 = principal of loan,   An+1 = r × An – R
where   r = 1 + i

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 8A A recursive model for reducing-balance loans 325  

Example 1 Modelling a reducing-balance loan with a recurrence relation

Alyssa will borrow $4800 and will be charged compound interest at the rate of 15%
per annum, compounding monthly. She will make monthly repayments of $300 to
repay this loan.
a Construct a recurrence relation model for Alyssa’s loan.
b Apply the recurrence relation to determine how much Alyssa will still owe on the
loan after two repayments.

Solution
a 1 Write down the values of A0 and R. A0 = 4800 (principal of loan)
R = 300 (monthly repayment)
2 Calculate the value of the decimal 15% per annum compounding monthly
interest rate, i. 15
i=
12 × 100
= 0.0125
3 Calculate the value of r. r=1+i
= 1 + 0.0125
= 1.0125
4 Write your answer. A0 = 4800, An+1 = 1.0125 × An − 300
b 1 A
 pply the recurrence relation two times A0 = 4800
to find A2. A1 = 1.0125 × 4800 − 300 = 4560
A2 = 1.0125 × 4560 − 300 = 4317
2 Calculator recursion can also be used to |
find A2. 0
Press AC (Casio) or clear (TI) to create
a blank calculation screen. 4800
Type 4800 and then press = (Casio) 4800
or enter (TI)
Pressing ‘ = ’ or enter once for A1
Next, type × 1.0125 − 300 and
then press = (Casio), or enter (TI), Ans × 1.0125 − 300
twice to find A2 4560

Pressing ‘ = ’ or enter once again for A2

Ans × 1.0125 − 300
4317

3 Write your answer. After two repayments, Alyssa will still owe
$4317.00.

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 326 Chapter 8 ■ Reducing-balance loans

▶▶Calculating the total interest charged for reducing-balance loans

When a repayment on a reducing-balance loan is made, the first priority is to pay the
interest that was charged after that compounding period. This interest amount is usually
smaller than the repayment amount and so any remaining amount of the repayment will
pay back some of the principal of the loan. In this way, the principal of the loan; that is, the
amount owed after each compounding period, will gradually be reduced in value.
After n compounding periods, the reduction in the principal can be calculated as:
Reduction in principal = A0 − An
The total repayment amount after n compounding periods can be calculated as:
Total repayment = n × repayment per compounding period
The total repayment amount pays both the reduction in principal and the interest charged
and so the total interest charged after n repayments can be calculated as:
Total interest = total repayment − reduction in principal

Total interest charged for reducing-balance loans

Let A0 be the principal amount of a reducing-balance loan.

Let An be the balance of a reducing-balance loan after n compounding periods.
Let R be the repayment amount per compounding period.
Let I be the total interest charged after n compounding periods.
The reduction in principal after n compounding periods = A0 – An.
The total repayments made after n compounding periods = n × R.
I = total repayments made – reduction in principal
    = n × R – (A0 – An)
Another way of writing this rule is
I = An + n × R – A0

Example 2 Analysing reducing-balance loans with a recurrence relation

Henry will borrow $20 000 and will be charged compound interest at the rate of 8.4%
per annum, compounding quarterly. He will make quarterly repayments of $1500
to repay this loan.
a Construct a recurrence relation model for Henry’s loan.
b How much interest will Henry pay in the first year of his loan?

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 8A A recursive model for reducing-balance loans 327  

Solution
a 1 W
 rite down the values of A0 = 20 000 (loan principal)
A0, i, and R. 8.4
i= (decimal interest rate per quarter)
4 × 100
= 0.021
R = 1500 (quarterly repayment)
2 Calculate the value of r. r = 1 + 0.021
= 1.021
3 Write your answer. A0 = 20 000, An+1 = 1.021 × An − 1500
b 1 One year has four quarters. |
Apply the recurrence relation four 0
times to find A4. Using calculator
recursion: 20000
Press AC (Casio) or clear (TI) to 20000
create a blank calculation screen.
Pressing ‘ = ’ or enter once for A
1
Type 20000 and then press = (Casio)
or enter (TI) Ans × 1.021 − 1500
18920
Next, type × 1.021 − 1500 and then
press = (Casio), or enter (TI), four
Pressing ‘ = ’ or enter three more times for A4
times to find A4.
Ans × 1.021 − 1500
Round your answer to the nearest
15542.00488
cent if necessary.

2 Write down the value of n, R, A0 n = 4 (quarterly repayments)

and An. R = 1500 (repayment amount)
A0 = 20 000 (principal amount)
An = 15 542 (balance after 4 repayments)
3 Calculate the interest paid after one Interest paid = n × R − (A0 − An)
year (four repayments). = 4 × 1500 − (20 000 − 15 542)
= 6000 − 4458
= 1542

4 Write your answer. In the first year of his loan, Henry will pay
$1542.00 in interest.

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 328 Chapter 8 ■ Reducing-balance loans 8A

Exercise 8A
Constructing a recurrence relation model for a reducing-balance loan
Example 1 1 The table below shows the principal amount, annual percentage interest rate,

SF
compounding period and repayment amount for six reducing-balance loans.

Principal Annual percentage Compounding Repayment per

interest rate period compounding period
a   $6500 14% Yearly $1800
b $14 000 11.2% Quarterly $2000
c $22 000 7.2% Quarterly $1000
d $85 000 8.04% Monthly $1800
e $150 000 6.48% Monthly $1700
f $245 000 4.16% Fortnightly $1200

For each of these loans:

i construct a recurrence relation model
ii apply the recurrence relation model to find how much is still owed on the loan after
three compounding periods

Using a recurrence relation model to analyse a reducing-balance loan

Example 2 2 A reducing-balance loan can be modelled by the recurrence relation

CF
A0 = 2500, An+1 = 1.08 × An − 600
where An is the balance of the loan after n repayments have been made.
a What is the value of the repayment each compounding period?
b Use calculator recursion to determine how much is still owed on the loan after
three repayments have been made.
c How much interest has been paid after three repayments?

3 A reducing-balance loan can be modelled by the recurrence relation

A0 = 5000, An+1 = 1.01 × An − 860
where An is the balance of the loan after n repayments have been made.
a What is the value of the repayment each compounding period?
b Use calculator recursion to determine how much is still owed on the loan after five
repayments have been made.
c How much interest has been paid after five repayments?

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 8A 8A A recursive model for reducing-balance loans 329  

4 A reducing-balance loan with interest compounding monthly and with monthly

repayments can be modelled by the recurrence relation
A0 = 14 500, An+1 = 1.0072 × An − 1500
where An is the balance of the loan after n repayments have been made.
a Calculate the annual percentage rate of interest.
b Use calculator recursion to determine how much is owed on the loan after three
months.
c How much interest has been paid after three months?

5 A reducing-balance loan with interest compounding monthly and with monthly

repayments can be modelled by the recurrence relation
A0 = 6300, An+1 = 1.0095 × An − 450
where An is the balance of the loan after n repayments have been made.
a Calculate the annual percentage rate of interest.
b Use calculator recursion to determine how much is owed on the loan after four
months.
c How much interest has been paid after four months?

Problem-solving and modelling

6 Andrea needs to borrow $20 000. Her bank will charge interest at the annual

CU
percentage interest rate of 7.08%, compounding monthly. Andrea will be required
to make monthly repayments of $600, but Andrea thinks she can afford to pay $800
instead.
a Construct a recurrence relation model for the loan with monthly repayments of
$600 and apply it to evaluate:
i how much Andrea would owe after five months
ii the total interest that Andrea would pay after five months
b Construct a recurrence relation model for the loan with monthly repayments of
$800 and apply it to evaluate:
i how much Andrea would owe after five months
ii the total interest that Andrea would pay after five months
c If Andrea makes monthly repayments of $800 instead of $600, how much interest
will she save over the first five months of her loan?

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 330 Chapter 8 ■ Reducing-balance loans

8B Investigating reducing-balance loans

▶▶Repayment schedules for reducing-balance loans
Consider a loan with principal $1000. Interest will be charged at the rate of 1.25% per
month and a repayment of $250 will be made every month.
The calculation of the amount still owed after the first repayment has been made is
shown here.
Repayment of
$250.00
Principal Add interest Pay Reduce New
(1.25%) interest principal balance

$1000.00 $12.50 $12.50 $237.50 $762.50

The calculation of the amount still owed after the second repayment has been made is
shown here.
Repayment of
$250.00
Previous Add interest Pay Reduce New
balance (1.25%) interest principal balance

$762.50 $9.53 $9.53 $240.47 $522.03

It is convenient to record all of the results of these calculations in a table called a repayment
schedule.
A repayment schedule for the first three months of this reducing-balance loan is shown below.
Repayment Repayment Interest paid Principal Balance of
number amount reduction loan
0 0 0 0 1000.00
1 250.00 12.50 237.50 762.50
2 250.00 9.53 240.47 522.03
3 250.00 6.53 243.47 278.56

Note: Some of the money values in the repayment schedule have been rounded to the nearest cent and may
differ slightly to the values calculated using a recurrence relation model. The repayment schedule values
are rounded after every calculation (if necessary) while the recurrence relation calculations are not.

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 8B Investigating reducing-balance loans 331  

Constructing a repayment schedule for a reducing-balance loan

At each step of the loan:
1 interest paid = interest rate per compounding period × unpaid balance
For example, when repayment 2 is made:
interest paid = 1.25% of $762.50 = $9.53
2 principal reduction = repayment − interest
For example, when repayment 2 is made:
principal reduction = $250.00 − $9.53 = $240.47
3 balance of loan = previous balance − principal reduction
For example, when repayment 2 is made:
balance = $762.50 − $240.47 = $522.03
4 total interest paid = total repayments made − (principal − balance)

Example 3 Constructing a repayment schedule for a reducing-balance loan

A repayment schedule for the first six repayments of a reducing-balance loan are shown
in the table below. Interest is charged at the annual percentage interest rate of 7.68%,
compounding monthly, with monthly repayments of $600.

Repayment Repayment Interest paid Principal Balance of loan

number amount reduction
0 0 0 0 8500.00
1 600.00 54.40 545.60 7954.40
2 600.00 50.91 549.09 7405.31
3 600.00 47.39 A 6852.70
4 600.00 43.86 556.14 6296.56
5 600.00 B 559.70 5736.86
6 600.00 36.72 563.28 5173.58

a What is the principal value of this loan?

b Calculate the value of A, the principal reduction from repayment number 3.
c Calculate the value of B, the interest paid with repayment number 5.
d Calculate the total interest paid after six repayments.

Solution
a The principal of the loan is the The principal value of the loan is $8500.
balance after repayment number 0.
b Principal reduction = A = $600.00 − $47.39
repayment amount − interest = $552.61
charged

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 332 Chapter 8 ■ Reducing-balance loans

c The interest paid with repayment ╱12

7.68
number 5 is the interest rate B= × 6296.56
100
percentage of the balance after
= 40.2979
repayment 4, rounded to the
nearest cent.
= 40.30
d 1 C alculate the total of the Total repayments = 6 × 600
repayments made. = 3600
2 Calculate the total Total interest = total repayments − (principal − balance)
interest paid. = 3600 − (8500 − 5173.58)
Note: This answer can be verified by = 273.58
adding all of the ­values in the interest
column of the repayment schedule.

3 Write your answer. The total interest paid on this loan after six
­repayments is $273.58.

▶▶Graphs of reducing-balance loans

The repayment schedule for a reducing- Value ($)
balance loan shows that after each
successive repayment on the loan, the 600
amount of interest that is charged decreases.
500
It also shows that the principal reduction
increases after each successive repayment. 400

The graph on the right shows the interest 300

paid with each repayment as a red cross.
200
This interest value decreases with each
repayment. 100

The graph shows the reduction in the n

0 1 2 3 4 5 6
­principal of the loan with each repayment
as a blue dot. This value increases with each
repayment.

▶▶The effect of the repayment amount on reducing-balance loans

A reducing-balance loan repayment schedule spreadsheet
The repayment schedule for a reducing-balance loan is very easy to construct using a
spreadsheet. Such a spreadsheet could be used to further explore and investigate reducing-
balance loans. There are instructions for setting up a reducing-balance loan spreadsheet and
a copy of the completed spreadsheet on the next page.

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 8B Investigating reducing-balance loans 333  

Spreadsheet Spreadsheet activity 8B: Repayment schedule for a reducing-balance loan

Use the spreadsheet to investigate the effect the repayment amount has on a
reducing-balance loan.

The effect of the repayment amount on reducing-balance loans

The larger a regular repayment amount for a particular reducing-balance loan, the quicker
that loan will be repaid; that is, the shorter the term of the loan will be. The term of a
reducing-balance loan can be reduced by increasing the regular repayment amount.
A lump sum repayment is a repayment that is larger than the usual amount required by a
reducing-balance loan. A lump sum repayment can reduce the amount of interest that is paid in a
reducing-balance loan, but it can also reduce the term of the loan, if it is large enough. The larger
the lump sum repayment, the more interest is saved and the shorter the term of the loan will be.
The earlier that a lump sum repayment is paid, the more interest is saved. This is because
the amount of interest charged towards the end of the loan is much smaller than the amount
of interest charged towards the start of a loan; that is, the interest charged decreases after
each repayment of a reducing-balance loan.
Home loans are an example of how this feature of reducing-balance loans can be used to
great advantage by a borrower. Many people choose to repay more than is required by their
home loan agreements because this will mean they will pay less interest overall than if
they paid only the required amount. They may also choose to pay larger amounts, perhaps
the funds from the sale of another property, into their home loan as lump sum repayments,
therefore significantly reducing the balance and the interest charged overall.

The effect of the repayment amount on reducing-balance loans

In general, for reducing-balance loans:

■■ increasing the repayment amount

•• can mean the loan is repaid in a shorter time
•• will mean less interest is paid overall
■■ lump sum repayments
•• can mean the loan is repaid in a shorter time
•• will mean less interest paid overall
■■ the earlier a lump sum repayment is made, the less interest is paid overall
(or the more interest is saved overall).

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 334 Chapter 8 ■ Reducing-balance loans 8B

Exercise 8B
Constructing a repayment schedule for a reducing-balance loan
Example 3 1 Misaki borrowed $8400 and will be charged compounding interest at the rate of 11.4%

SF
per annum, compounding monthly. Misaki will make monthly repayments of $500.
a Construct a repayment schedule to determine the balance of Misaki’s loan after
five repayments.
b How much interest in total has Misaki paid after five repayments?
2 Vadik borrowed $2000 and will be charged compounding interest at the rate of 18.2%
per annum, compounding weekly. Vadik will make weekly repayments of $100.
a Construct a repayment schedule to determine the balance of Vadik’s loan after five
repayments.
b How much interest in total has Vadik paid after:
i three weeks? ii four weeks?
3 Sofia borrowed $4600 and will be charged compounding interest at the rate of 4.8%
per annum, compounding monthly. The first three repayments that Sofia made were
for $300. The next two repayments Sofia made were for $450.
Construct a repayment schedule to determine the balance of Sofia’s loan after five
repayments.
4 Jabulani borrowed $7500 and will be charged compounding interest at the rate of
3.8% per annum, compounding quarterly. He made two repayments of $300 and then
doubled this amount for the next three repayments.
Construct a repayment schedule to determine the balance of Jabulani’s loan after five
repayments.
Using a spreadsheet to analyse reducing-balance loans
Spreadsheet 5 Consider a reducing-balance loan of $25 000. This loan is charged interest at the rate
of 3.8% per annum, compounding monthly. Monthly repayments of $2130 will be CF
8BQ5
used to repay this loan, except for the final repayment.
a Enter these loan details into the repayment schedule for a reducing-balance loan
spreadsheet.
i What is the balance of the loan after five repayments?
ii The balance of the loan is negative for the first time after twelve repayments.
What does this tell you?
iii How much interest in total has been charged on this loan?
b The borrower made a lump sum repayment of $3000 as repayment number four.
i What is the value of the final repayment required now?
ii How much interest in total has been charged on this loan with the lump sum
repayment?
iii How much interest has been saved by making this lump sum repayment?
c If the lump sum repayment was made as a different repayment number, which
one(s) should it be and why?
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 8C Solving problems involving reducing-balance loans 335  

8C Solving problems involving reducing-balance loans

▶▶The annuities formula
If the total number of repayments made to repay a reducing-balance loan is small, it is
convenient to use a recurrence relation to model that loan. But for many reducing-balance
loans, such as home loans, the principal is very large, and the repayments are made over a
long period of time, usually decades.
For example, a home loan for $250 000 might be repaid over 25 years using monthly
repayments. Analysing this reducing-balance loan using a recurrence relation would take
25 × 12 = 300 interest calculations. A repayment schedule for this loan would require
300 rows.
There is a formula that can be used to calculate the balance of any reducing-balance loan
after any number of repayments and it is called the annuities formula. Instead of using
recurrence relation symbols in this formula, we can use P to represent the principal amount
of the loan and A to represent the future value of the loan after n compounding periods.

The annuities formula

Let P be the principal amount of the loan.

Let n be the total number of compounding periods.
Let A be the balance of the loan after n repayments.
Let i be the decimal interest rate per compounding period.
Let R be the repayment made after each compounding period.
The balance of the reducing-balance loan after n compounding periods is
((1 + i) n − 1)
A = P(1 + i) n − R
i

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 336 Chapter 8 ■ Reducing-balance loans

Example 4 Using the annuities formula

Nomsa has borrowed $8000 at an interest rate of 11.28% per annum, compounding
monthly.
If she makes monthly repayments of $500, what will be the balance of the loan after
one year?
Round your answer to the nearest cent.

Solution
1 Write down the P = 8000
values of P, i, R 11.28
i= = 0.0094
and n. 12 × 100
R = 500
n = 12 (one year of monthly repayments)
2 Apply the ­ ((1 + 0.0094) 12 − 1)
annuities formula A = 8000(1 + 0.0094) 12 − 500 ×
0.0094
to ­calculate A. A = 2630.419
3 Write your answer, After 1 year (12 months), the balance of this loan is $2630.42.
rounding to the
nearest cent.

The annuities formula can be rearranged algebraically in order to calculate other loan
values, such as the repayment amount, annual interest rate or the number of compounds.
This involves some complex calculations that are beyond the scope of this course.
Technology, however, can be used to solve more complex problems involving reducing-
balance loans.

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 8C Solving problems involving reducing-balance loans 337  

▶▶Solving reducing-balance loan problems using technology

Reducing-balance loan calculations involve six different values:

■■Principal
■■Annual percentage rate of interest
■■Number of compounds per year
■■Future balance after n compounds
■■n, the total number of compounds
■■Repayment amount
If the number of compounds per year is known, along with any four other values, the sixth
can be calculated using technology such as an online calculation tool or a spreadsheet.
Spreadsheet Spreadsheet activity 8C: Reducing-balance Loan Calculator

Using the reducing-balance loan calculator spreadsheet

The Reducing-balance Loan
Calculator spreadsheet is
shown here.
Click the ‘Clear’ button before
every calculation.
Enter the five known quan-
tities into the corresponding
orange box.
Click the ‘calculate’ button next
to the quantity that you want to
find. It will appear in the box.

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 338 Chapter 8 ■ Reducing-balance loans

Example 5 Solving reducing-balance loan problems using a spreadsheet

Julian has a home loan with a principal value of $250 000. He will be charged interest at
the rate of 3.75% per annum, compounding fortnightly. If he makes regular fortnightly
repayments of $950, how long will it take for the balance to first be below $200 000?

Solution
1 Identify the known Principal = $250 000
quantities. Future Balance = $200 000
Compound per year = 26 (fortnightly)
Annual percentage rate of interest = 3.75%
Repayment = $950
Spreadsheet 2 Click ‘Clear’ on the
reducing balance loan
8CQ2
spreadsheet and enter the
known values.
Note: Type the numbers into
the balance and principal boxes
without the dollar sign or
thousands comma. When you press
Enter, the value will automatically
be shown in currency format.

3 Click the ‘Calculate’

button next to total
number of compounds.
This will be calculated
and entered into the box 80.08493681
for you.

4 Round the number of It will take 81 fortnights for Julian’s loan balance to first be below
compounds up to the $200 000.
nearest whole number and
write your answer.
Note: If the number of compounding periods was rounded down to 80, the future value of the loan will
be slightly more than $200 000.

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 8C Solving problems involving reducing-balance loans 339  

Example 6 Solving reducing-balance loan problems using a spreadsheet

Andrew has a loan of principal $20 000 and is charged interest at the rate of 7.25%
per annum, compounding monthly. Andrew would like to repay this loan fully after
three years of equal monthly repayments, except for the final repayment.
a What is the usual monthly repayment for this loan?
b Which repayment number is Andrew’s final repayment?
c How much will this final repayment be?
d How much interest in total has Andrew paid on this loan?

Solution
a 1 
Identify the known Principal = $20 000
quantities. Future value = $0
Compound per year = 12 (monthly)
Annual interest rate = 7.25%
Number of compounding periods = 3 years × 12
           = 36 months
Spreadsheet 2 Click ‘Clear’ on the
8CQ2 reducing balance loan
spreadsheet and enter the
known values.
Note: Type the numbers into the
balance and principal boxes without
the dollar sign or thousands comma.
When you press Enter, the value will
automatically be shown in
currency format.

3 Click the “Calculate”

button next to repayment.
The required fortnightly
repayment will be calculated
and entered into the box
for you.
Note: this repayment amount is a
rounded value. Repayments calcul­ated this
way will not usually repay the loan fully in
the exact number of compounds used in the
calculations. Almost all reducing-balance
loans require the final repayment to be
adjusted to fully repay the loan.
4 Write your answer. The usual monthly repayment is $619.83 for this loan.

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 340 Chapter 8 ■ Reducing-balance loans

b If Andrew wants to repay this The final repayment of Andrew’s loan will be repayment
loan after 3 years, then the last ­number 36.
repayment of the third year is
the final repayment of the loan.

c 1 C
 lick ‘Clear’ and enter all
the known values, except for
the future value.

2 Click ‘calculate’ next to the

future value.
Note: A future value that is negative
indicates that the repayments have
overpaid the loan. A future value that is
positive indicates that the repayments
have underpaid the loan. In both cases,
the value shown in the future value must
be added to the usual repayment amount.

3 Calculate the final repayment. Final repayment = $619.83 + $0.02

= $619.85
4 Write your answer. Andrew’s final repayment will be $619.85 to fully repay
his loan.
d1 C
 alculate the total Total repayments = 35 × $619.83 + $619.85
repayments made. = $22 313.90
2 Total interest = total Total interest = $22 313.90 − $20 000
repayments − principal = $2313.90
3 Write your answer. Andrew will pay a total of $2313.90 interest on this loan.

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 8C 8C Solving problems involving reducing-balance loans 341  

Exercise 8C
All money amounts in this exercise should be rounded to the nearest cent.

Using the annuities formula

Example 4 1 Use the annuities formula to find the future value of each of the following reducing-

SF
balance loans after the given number of compounding periods. Round your answers to
the nearest cent.

 Principal Annual Compounding Repayment per Balance

­percentage rate period compounding after …
of interest period
a    $8000 4.5% Monthly $350 6 months
b $25 000 7.8% Monthly $1200 1 year
c $240 000 8.3% Quarterly $7900 5 years
d $75 000 6.9% Quarterly $4800 2 years
e $50 000 4.6% Weekly $350 1 year

Solving reducing-balance loan problems using technology

Example 5 2 Use technology to find the future value of each of the following reducing-balance loans

CF
after the given number of compounding periods. Round your answers to the nearest cent.

Principal Annual Compounding Repayment per Balance

­percentage rate period compounding after …
of interest period
a    $2000 15.4% Weekly $200 10 weeks
b $16 000 10.4% Monthly $800 12 months
c $48 000 6.8% Monthly $1400 2 years
d $135 000 4.72% Quarterly $5000 5 years
e $350 000 3.81% Monthly $4000 8 years

Problem-solving and modelling

3 A reducing-balance loan of $90 000 is to be repaid with monthly repayments. Interest
CF

on this loan will be charged at the rate of 11% per annum, compounding monthly.
The loan will be repaid over 30 years, that is 360 monthly repayments.
a Determine the repayment amount. Round your answer to the nearest cent.
b Use the rounded repayment amount from 3a to determine the balance of the loan
after 4 years.

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 342 Chapter 8 ■ Reducing-balance loans 8C

4 A building society offers $240 000 home loans at an interest rate of 10.25% per

CF
annum, compounding monthly. Chelsea would like to pay off this loan over 15 years
with monthly repayments.
a Determine the repayment amount. Round your answer to the nearest dollar.
b Use the rounded repayment amount from 4a to determine how many months it
takes for Chelsea’s loan balance to first fall below $200 000.

5 Dan arranges to make repayments of $450 per month to repay a loan of $20 000. If
interest is being charged at the rate of 9.5% per annum, compounding monthly, find:
a the number of months required to repay this loan, rounded to the nearest month.
b the total interest paid after 2 years of repayments.

6 Isla borrowed $35 000 and will be charged interest at the rate of 10.5% per annum,

CU
compounding monthly. Isla would like to repay this loan over a period of 20 years.
a What monthly repayments would be required for this loan? Round your answer to
the nearest cent.
b What is the balance of the loan after 4 years of repayments? Use the rounded
answer from 6a in your calculation.
After 4 years, the interest rate for Isla’s loan was increased to 13.75% per annum. Isla
would still like to repay this loan over a 20 year period.
c What is the new monthly repayment required for this loan? Round your answer to
the nearest cent.

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 Chapter 8 Review 343  

Review
Key ideas and chapter summary

Reducing-balance loan A reducing-balance loan is a type of compound interest

AS loan that is repaid in regular repayments. The interest of a
reducing-balance loan is calculated on the amount still owing
after each repayment is made.

Recursive model for a A recurrence relation that can be used to determine the balance of
reducing-balance loan a reducing-balance loan after n compounding periods.
If the decimal rate of interest per compounding period is i and
the regular repayment amount is R, then the recursive model for a
reducing-balance loan is
A0 = principal of loan, An+1 = r × An – R
where r = 1 + i

Repayment schedule A table that summarises the interest calculations at every

for a reducing-balance ­compounding stage of a reducing-balance loan is called
loan ­repayment schedule. A repayment schedule shows the ­
repayment number, repayment amount, interest paid, principal
reduction and loan balance after each repayment for some, or
all, of the repayments of a loan.

Annuities formula A formula that can be used to calculate the balance of a reducing-
balance loan given the principal (P), decimal rate of interest
per compounding period (i), number of compounding periods (n)
and repayment amount (R). The annuities formula is
((1 + i) n − 1)
A = P(1 + i) n − R
i

Total interest The total interest paid on a reducing-balance loan after n

repayments:
= total repayments made − (principal − balance after n
repayments)

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 344 Chapter 8 ■ Reducing-balance loans
Review

Skills check
Having completed this chapter, you should be able to:

■■ use a recursive model to determine the balance of a reducing-balance loan after n

compounding periods
■■ write a recursive model for a reducing-balance loan
■■ construct and interpret a repayment schedule for a reducing-balance loan
■■ understand the effect of the repayment amount on reducing-balance loans
■■ understand the effect of a lump sum repayment on a reducing-balance loan
■■ analyse reducing-balance loans with a spreadsheet
■■ use the annuities formula to determine the balance of a reducing-balance loan after n
compounding periods
■■ solve reducing-balance loan problems using technology (spreadsheet calculation tool).

Multiple-choice questions
1 A reducing-balance loan is modelled by the recurrence relation shown below.
A0 = 25 000, An+1 = 1.007 × An − 400

where An is the balance of the loan after n months.

The balance of the loan after five months is:
A $23 626.15
B $23 859.14
C $24 090.51
D $25 707.38
E $25 887.34

2 Hermione borrows $18 000 and will be charged compound interest at the rate of
6.96% per annum compounding monthly. Hermione will repay the loan with monthly
repayments of $850.
If An is the balance of the loan after n months, a recurrence relation model for this
reducing balance loan is:
A A0 = 18 000, An+1 = 1.0058 × An − 850
B A0 = 18 000, An+1 = 1.0174 × An − 850
C A0 = 18 000, An+1 = 1.0696 × An − 850
D A0 = 18 000, An+1 = 1.0174 × An − 1242
E A0 = 18 000, An+1 = 1.0696 × An − 1242

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 Chapter 8 Review 345  

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Use the following information to answer questions 3, 4 and 5.
A repayment schedule for the first five repayments of a reducing-balance loan is shown
below.

Repayment Repayment Interest paid Principal Balance of

number amount reduction loan
0 0 0 0 15 000.00
1 500.00 97.50 402.50 14 597.50
2 500.00 94.88 405.12 14 192.38
3 500.00 92.25 A 13 784.63
4 500.00 89.60 410.40 13 374.23
5 500.00 86.93 413.07 12 961.16

3 What is the principal of this loan?

A $97.50 B $402.50 C $500.00 D $12 961.16 E $15 000

4 What is the value of A, the reduction in principal by repayment number 3?

A $312.87 B $407.75 C $497.37 D $500.00 E $592.25

5 The interest charged on this loan compounds monthly and monthly repayments are made.
The annual percentage rate of interest for this loan is closest to:
A 6.5% B 6.67% C 7.8% D 8.01% E 8.9%

6 A reducing-balance loan has principal $180 000 and will be repaid with monthly
repayments of $1500. The interest rate for this loan is 6.5% per annum, compounding
monthly.
Using the annuities formula, the balance of this loan after two years will be:
A $144 000.00 B $166 583.04 C $167 667.37
D $173 508.88 E $176 807.03

7 Mei Hui has borrowed $28 000 and will be charged compound interest at the rate
of 6.4% per annum compounding monthly. She will repay this loan with exactly 24
repayments. The monthly repayment amount is closest to:
A $850 B $1046 C $1246 D $2415 E $2854

8 A reducing-balance loan with principal $40 000 is repaid with monthly repayments of
$550. The annual interest rate is 5.2%. How many repayments does it take to reduce
the balance of this loan below $35 000?
A 9 B 10 C 11 D 12 E 13

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 346 Chapter 8 ■ Reducing-balance loans
Review

9 If the balance of a reducing-balance loan with principal $175 000 has been reduced
to $89 573.97 after 35 quarterly repayments of $4218, the annual percentage rate of
interest for the loan is closest to:
A 5.2% B 5.4% C 5.6% D 5.8% E 6.0%

10 A loan of $6000, plus interest, is to be repaid with exactly 12 quarterly repayments.

Interest is charged at the rate of 10% per annum, compounding quarterly. If the first 11
repayments are of value $580, the 12th and final repayment must be:
A $228.97 B $351.03 C $580.00 D $647.91 E $931.03

Short-answer questions
1 A reducing-balance loan is modelled using the recurrence relation shown below.

SF
A0 = 9500, An+1 = 1.0035 × An − 250

In the recurrence relation, An is the balance of the loan after n fortnightly repayments.
a What is the principal of this loan?
b What is the value of the fortnightly repayments?
c What is the balance of this loan after six repayments?

2 Barry is considering borrowing $250 000 to buy a house. His bank will charge interest
at the rate of 5.88% per annum, compounding monthly. Barry can afford to make
repayments of $2400 per month.
Let An be the balance of Barry’s loan after n months.
a What is the monthly percentage rate of interest for Barry’s loan?
b Construct a recurrence relation model for Barry’s loan.
c What is the balance of Barry’s loan after 6 months?
d How many months will it take for Barry’s loan to have a balance below $240 000
for the first time?

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 Chapter 8 Review 347  

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3 A repayment schedule for a reducing-balance loan repaid with monthly repayments is
shown below.

Repayment Repayment Interest paid Principal Balance of

number amount reduction loan
0 0 0 0 3500.00
1 600.00 32.20 567.80 2932.20
2 600.00 26.98 573.02 2359.18
3 600.00 21.70 578.30 1780.88
4 600.00 16.38 583.62 1197.26
5 600.00 11.01 588.99 608.27
6 600.00 5.60 594.40 13.87

a What is the principal of this loan?

b What is the value of the monthly repayment?
c Calculate the:
i monthly interest rate, rounded to two decimal places.
ii annual interest rate, rounded to two decimal places.
d If this loan was fully repaid with repayment number six, how much should that
repayment be?

4 A reducing-balance loan of $125 000 is to be repaid with monthly repayments of $1000.

The annual percentage rate of interest for this loan is 3.72%.
a Construct a repayment schedule that shows the first four repayments of this loan.
b Use the annuities formula to determine the balance of the loan after two years.

5 Chelsea has borrowed $75 000 and will be charged interest at the rate of 7.44% per
annum, compounding monthly. Chelsea will repay this loan with monthly repayments
of $1500 per month.
a What is the balance of Chelsea’s loan after two repayments?
b How much interest in total has been paid after two repayments?

6 Anton borrowed $149 000 to buy an apartment and has been paying $1000 per
fortnight to repay this loan. The balance of Anton’s loan is $84 987.19 after 3 years
of payments. What is the annual percentage rate of interest for this loan? Round your
answer to two decimal places.

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 348 Chapter 8 ■ Reducing-balance loans
Review

Extended-response questions
1 Merlin borrowed $84 000 and has been charged compound interest at the annual

CF
percentage interest rate of 7.08% per annum, compounding monthly. After three years
of repayments, Merlin will still owe $43 845.98 on his loan.
a Determine the monthly repayment amount that Merlin has been paying.
b How much will Merlin owe after a further two years of repayments?
After a total of four years of repayments, Merlin increases his repayment amount so
that his loan is fully repaid after one further year.
c Determine the new monthly repayment for this loan. Round your answer to the
nearest cent.

2 Karrie has borrowed $62 000 and will repay this loan with monthly repayments of
$1200 per month. Interest is charged at the rate of 7.32% per annum, compounding
monthly.
a Calculate the balance of the loan after one year.
b How much interest has been paid after one year?
After the 12th repayment, the annual percentage interest rate for Karrie’s loan
increased to 7.44% per annum, compounding monthly.
c If Karrie continues to pay repayments of $1200, what is the balance of her loan
after a further two years?

3 Angelique has borrowed $160 000 and will be charged interest at the annual
percentage interest rate of 5.64% per annum, compounding monthly.
Angelique is considering paying monthly repayments of $840 per month.
a How many repayments of $840 will Angelique need to make to reduce the balance
of the loan to below $100 000 for the first time?
b If Angelique pays monthly repayments of $1000 per month, how many fewer
repayments will she need to make to reduce the balance of the loan to below
$100 000 for the first time, when compared to repayments of $840 per month?

4 A reducing-balance loan of $180 000 is to be repaid with monthly repayments. Interest

on this loan will be charged at the rate of 3.72% per annum, compounding monthly.
a How many monthly repayments of $1000 will it take to halve the balance of the
loan? Round your answer to the nearest whole number.
b What monthly repayment is required in order to halve the balance in 100
repayments? Round your answer to the nearest dollar.

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 Chapter 8 Review 349  

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5 Nicholas needs to borrow $165 000 to purchase a flat. His bank has offered him two

CU
loans, each with different conditions as shown below:
Fixed Interest Home Loan:
■■ monthly repayments
■■ annual percentage rate of interest 4.6% per annum, compounding monthly
■■ fixed interest for the first five years of the loan
■■ monthly repayments of $1071.00
■■ lump sum repayments allowed
■■ no extra repayments
Variable Interest Home Loan:
■■ monthly repayments
■■ annual percentage rate of interest 4.5% per annum, compounding monthly
■■ annual percentage rate of interest may vary at any time
■■ no lump sum repayments
■■ extra repayments allowed
Suppose that Nicholas chooses the Fixed Interest Home Loan.
a i What will be the balance of Nicholas’ loan after five years?
ii Calculate the amount of interest that Nicholas will have paid after five years.
b Nicholas is expecting to receive funds from a family trust. This will become
available after two years; that is, after 24 repayments of $1071 have been made. He
thinks he could make a lump sum repayment of $20 000 as repayment number 25.
i What is the balance of Nicholas’ loan after five years if this lump sum
repayment is made?
ii How much interest will be saved by making this lump-sum repayment?
iii Explain why Nicholas should make this lump sum repayment as soon as the
money is available to him rather than leaving it until later in the loan.
Suppose that Nicholas chooses the Variable Interest Home Loan.
Assume that the interest rate does not change in the first five years of the loan.
c What monthly repayments would be required to ensure the Fixed Interest Home
Loan (with no lump sum repayment) and Variable Interest Home Loan would have
the same balance after five years?
After repayment number 24, the annual percentage rate of interest for this loan
increased to 4.6%.
d What new monthly repayment amount would be required to ensure the Fixed
Interest Home Loan (with no lump sum repayment) and Variable Interest Home
Loan (with increased interest rate) would have the same balance after five years?
Nicholas has decided not to make lump sum repayments on his loan.
The annual percentage rate of interest for the Variable Interest Home Loan is expected
to increase by 0.05% each year over the next five years.
Nicholas can afford repayment of no more than $1300 per month.
e Provide some advice to Nicholas about the best loan for him to choose. Justify your
advice by explaining your mathematical reasoning.

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 9
Chapter 9

Annuities and perpetuities

UNIT 4 INVESTING AND NETWORKING

Topic 1 Loans, investments and annuities

▶▶ How do we use a recursive model for an annuity?

▶▶ How do we determine the balance of an annuity after a certain
amount of time?
▶▶ How do we construct and interpret a payment schedule for an
annuity?
▶▶ How do we find the effect of the repayment amount on an
annuity?
▶▶ How do we analyse annuities using a spreadsheet?
▶▶ How do we find the payment withdrawn, required principal and
interest rate for a perpetuity?

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 9A Recursive model for annuities 351  

9A Recursive model for annuities

▶▶Annuities
An annuity is a type of investment that can be used to provide a regular income to the investor.
The principal of the annuity is the amount of money initially invested and this money will earn
interest that is calculated and added to the investment at regular time periods. In addition to this
interest, an investor may deposit a payment at regular time periods. This deposit adds to the
principal and will continue to earn interest over the life, or term, of the annuity. The balance of
the annuity will increase during the deposit phase of the investment.
After some time, the regular deposits an investor makes may stop and the investor may
choose to withdraw a payment at regular time periods instead of adding to the investment.
If the payment withdrawn is larger than the interest earned, then the balance of the annuity
will decrease during this withdrawal phase of the investment.
Superannuation is an example of annuity investment. When a person begins working, their
employer must make a regular payment into an investment fund or superannuation account. Over
their working life, the balance of the superannuation account grows with regular deposits and
interest. After retirement, the balance of the superannuation account will decrease because of the
regular payments that are withdrawn to provide the retirement income.

▶▶A recursive model for an annuity

The deposit phase of an annuity and the withdrawal phase of an annuity have different
recursive models.

A recursive model for the deposit phase of an annuity

Consider an annuity with a principal investment of $100 000. Interest will be earned at the
annual percentage interest rate of 6%, compounding yearly. A deposit of $15 000 will be
added to the annuity every year.
Let An be the balance of the annuity after n years.
The starting value of the recurrence relation is the principal value of the annuity, A0 = 100 000.
Each year, the annuity balance increases by the amount of interest that is earned, that is 6%
of the previous balance, and then increases by the amount of the deposit.
So: balance next year = balance this year + interest earned + deposit
= balance this year + 6% of the balance this year + deposit
= 100% of the balance this year
+ 6% of the balance this year + deposit
= 106% of the balance this year + deposit
= 1.06 × balance this year + deposit
In recurrence relation symbols:
An+1 = 1.06 × An + 15 000

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 352 Chapter 9 ■ Annuities and perpetuities

A recursive model for the withdrawal phase of an annuity

Consider an annuity with a current balance of $200 000. Interest will be earned at the annual
percentage interest rate of 6%, compounding yearly. Each year, $24 000 will be withdrawn
from this annuity.
Let An be the balance of the annuity after n years.
The starting value of the recurrence relation is the principal value of the annuity, A0 = 200 000.
Each year, the annuity balance increases by the amount of interest that is earned, that is 6%
of the previous balance, and then reduces by the amount withdrawn.
So: balance next year = balance this year + interest earned − withdrawal
          = balance this year + 6% of the balance this year − withdrawal
          = 100% of the balance this year + 6% of the balance this year −
withdrawal
          = 106% of the balance this year − withdrawal
          = 1.06 × balance this year − withdrawal
In recurrence relation symbols:
An+1 = 1.06 × An − 24 000
We now have a recurrence relation that can be used to model the balance of an annuity
during the deposit and withdrawal phases of that investment.

A recurrence relation model for an annuity

Let An be the balance of an annuity after n compounding periods.
Let n be the total number of compounding periods.
Let i be the decimal interest rate per compounding period for the annuity.
Let d be the payment deposited or withdrawn each compounding period.
A recurrence relation model for the balance of an annuity investment is:
    Deposit phase: A0 = balance of annuity investment, An+1 = r × An + d
        Withdrawal phase: A0 = balance of annuity investment, An+1 = r × An − d
where r = 1 + i

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 9A Recursive model for annuities 353  

Example 1 Modelling an annuity during the deposit phase with a recurrence

relation

Julian has just started a new job and his employer will deposit $1500 every month into a
superannuation account. Interest is earned at the rate of 4.5% per annum, compounding
monthly.
a Construct a recurrence relation model for this annuity.
b Apply the recurrence relation to determine the balance of Julian’s superannuation
account after 5 months.
Solution
a 1  Write down the initial balance A0 = 0
of the annuity, A0.
2 Calculate the value of the 4.5% per annum compounding monthly
decimal interest rate, i. 4.5
i=
12 × 100
i = 0.00375
3 Calculate the value of r. r=1+i
= 1 + 0.00375
= 1.00375
4 Write your answer. A0 = 0, An+1 = 1.00375 × An + 1500
b 1  Use calculator recursion to 0
determine the value of A5 0
(balance after five months).
Pressing ‘=’ or enter once for A1
ans × 1.00375 + 1500
1500

Pressing ‘=’ or enter four more times for A5

ans × 1.00375 + 1500
7556.461333

2 Write your answer (rounding to After five months, Julian’s superannuation account
the nearest cent if necessary). will have a balance of $7556.46.

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 354 Chapter 9 ■ Annuities and perpetuities

Example 2 Modelling an annuity investment with a recurrence relation

Reza plans to travel overseas. He will invest $12 000 in an annuity investment that earns
interest at the rate of 6% per annum, compounding monthly. Reza will withdraw a
payment of $1500 per month while he travels.
a Construct a recurrence relation model for this annuity investment.
b Apply the recurrence relation to determine the balance of Reza’s investment after
three months.
c How many payments of $1500 can Reza receive from this investment?
d After all payments of $1500 have been received, Reza can receive one final payment
to close the annuity. How much will this payment be?
Solution
a 1 W
 rite down the principal of the A0 = 12 000
investment, A0.
2 Calculate the value of the decimal 6% per annum compounding monthly
interest rate, i. 6
i=
12 × 100
i = 0.005
3 Calculate the value of r. r=1+i
= 1 + 0.005
= 1.005
4 Write your answer. A0 = 12 000, An+1 = 1.005 × An − 1500
b 1 U
 se calculator recursion to determine
the value of A3 (balance after three
months)
2 Press AC (Casio) or clear (TI) to
create a blank calculation screen.
3 Type 12000 and then press = (Casio)
12000
or enter (TI)
12000

Pressing ‘=’ or enter once for A1

4 Next, type × 1.005 − 1500 and then
Ans × 1.005 − 1500
press = (Casio), or enter (TI), four
10560
times to find A3.
Pressing ‘=’ or enter three times for A3
5 Write your answer (rounding to the
Ans × 1.005 − 1500
nearest cent if necessary).
7658.364

After three months, Reza’s annuity will have a

balance of $7658.36

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 9A Recursive model for annuities 355  

c 1 Use calculator recursion to count Pressing ‘=’ or enter four times for A4
the number of payments before
Ans × 1.005 − 1500
the balance of the annuity is less
6196.65582
than $1500.
Pressing ‘=’ or enter eight times for A8
Ans × 1.005 − 1500
276.3713495

2 Write your answer. Reza can withdraw 8 payments of $1500.

d 1 Use calculator recursion to apply the The balance of the annuity after 8 payments of
recurrence relation one last time. $1500 is $276.37.
2 The balance is now negative. Add Final payment = $1500 − $1222.25
this negative amount (rounded to the = $277.75
nearest cent) to the usual payment
amount to calculate the
final payment.
3 Write your answer. Reza’s final payment will be $277.75, after which
there will be nothing left in his annuity.

▶▶Calculating the total interest earned for annuities

When a payment is withdrawn from an annuity, part of this payment is made up of the
interest that has been earned after that compounding period. The interest amount is usually
smaller than the payment amount and so the balance of the annuity is used to make up the
remaining part of the payment. This will cause the balance of the annuity to reduce after
each compounding period.
The rule for calculating interest earned for an annuity are very similar to those for reducing-
balance loans.

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 356 Chapter 9 ■ Annuities and perpetuities

Total interest earned by annuities

Let A0 be the principal amount of an annuity.
Let n be the total number of compounding periods.
Let An be the balance of annuity after n compounding periods.
Let d be the payment deposited or withdrawn each compounding period.
Let I be the total interest earned after n compounding periods.
Deposit phase:
The increase in principal after n compounding periods = An − A0.
The total amount deposited after n compounding periods = n × d.
I = increase in principal − total amount deposited
= (An − A0) − n × d
Withdrawal phase:
The reduction in principal after n compounding periods = A0 − An.
The total payments withdrawn after n compounding periods = n × d.
I = total payments withdrawn – reduction in principal
  = n × d − (A0 − An)
Another way of writing these rules is
I = An − n × d − A0   during the deposit phase
I = An + n × d − A0   during the withdrawal phase

Example 3 Analysing annuities with a recurrence relation

Diego has an annuity with a current balance of $120 000.
His investment is earning interest at the rate of 7.68% per annum, compounding monthly.
For the next three months, Diego will deposit $500 per month into his annuity, after
which he will withdraw $2500 per month for a further five months.
a Construct a recurrence relation model for Diego’s annuity during the deposit phase.
b Apply this recurrence relation to determine the balance of Diego’s account after three
months.
c Construct a recurrence relation model for Diego’s annuity during the withdrawal
phase.
d How much interest has Diego’s investment earned during these eight months?

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 9A Recursive model for annuities 357  

Solution
a 1 Write down the values of A0. A0 = 120 000 (current balance of annuity)
2 Calculate the values of i, r and d. 7.68% per annum compounding monthly
7.68
i=
12 × 100
= 0.0064
r=1+i
= 1 + 0.0064
= 1.0064
d = 500 (deposit of $500)
3 Write your answer. A0 = 120 000, An+1 = 1.0064 × An + 500
b 1 Use calculator recursion to apply 120000
the recurrence relation three 120000
times to find A3.
Pressing ‘=’ or enter once for A1
ans × 1.0064 + 500
121268

Pressing ‘=’ or enter two more times for A3

ans × 1.0064 + 500
123828.3975

2 Write your answer, rounding to The balance of Diego’s investment is $123 828.40
the nearest cent if necessary. after three months.
c 1 The value of A0 for this A0 = 123 828.40
recurrence relation is the balance
of the investment after the
deposit phase.
2 Write down the values of i, r i = 0.0064
and d. r = 1.0064
d = 2500 (withdrawal of $2500)
3 Write your answer. A0 = 123 828.40, An+1 = 1.0064 × An − 2500

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 358 Chapter 9 ■ Annuities and perpetuities 9A

d 1 C
 alculate the amount of interest I = An − n × d − A0
earned during the deposit phase. I = 123 828.40 − 3 × 500 − 120 000
I = $2328.40
2 Calculate the balance of the
123828.40
annuity after five months of
123828.40
withdrawals, A5, by applying the
recurrence relation five times. Pressing ‘=’ or enter once for A1
ans × 1.0064 − 2500
122120.90

Pressing ‘=’ or enter four more times for A5

ans × 1.0064 − 2500
115180.93

3 Calculate the amount of interest I = An + n × d − A0

earned during the withdrawal I = 115 180.93 + 5 × 2500 − 123 828.40
phase. I = $3852.53
4 Calculate the total interest earned. Total interest = $2328.40 + $3852.53
= $6180.93

Exercise 9A
Constructing a recurrence relation model for an annuity during
deposit phase
Example 1 1 The table below shows the principal amount, annual percentage interest rate,

SF
compounding period and payment amount for 6 annuities.

Principal Annual percentage Compounding Deposit per

interest rate period ­compounding period
a $0 2.5% Yearly $5000
b $0 6.4% Quarterly $6500
c $320 000 3.6% Quarterly $8000
d $460 000 6.96% Monthly $4200
e $845 000 4.92% Monthly $7500
f $1 250 000 6.24% Weekly $2700

For each of these investments:

i construct a recurrence relation model
ii apply the recurrence relation model to find how much is left in the annuity after
three compounding periods
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 9A 9A Recursive model for annuities 359  

Constructing a recurrence relation model for an annuity during

withdrawal phase
2 The table below shows the principal amount, annual percentage interest rate,
compounding period and withdrawal amount per compounding period for six annuities.

Principal Annual Compounding Withdrawal per

percentage period compounding
interest rate period
a   $120 500 2.8% Yearly   $8000
b   $276 000 5.04% Quarterly   $4600
c   $358 000 5.72% Quarterly $25 000
d   $440 000 4.32% Monthly   $5000
e   $845 000 8.04% Monthly   $9600
f $1 360 000 7.8% Weekly   $2900

For each of these investments:
i construct a recurrence relation model
ii apply the recurrence relation model to find the balance of the annuity after three
compounding periods

Applying a recurrence relation model to analyse an annuity

Example 2 3 An annuity can be modelled by the recurrence relation
A0 = 5000, An+1 = 1.01 × An − 1030
where An is the balance of the annuity after n payments have been received.
a Explain how we can tell this annuity is in withdrawal phase.
b What is the payment that is withdrawn from this annuity each compounding
period?
c Use calculator recursion to apply the recurrence relation and determine the amount
left in the annuity after three payments have been received.
d How much interest has been earned after three payments have been received?

4 An annuity can be modelled by the recurrence relation

A0 = 6000, An+1 = 1.005 × An + 300
where An is the balance of the investment after n payments have been withdrawn.
a Explain how we can tell this annuity is in deposit phase.
b What is the payment that is deposited into this annuity each compounding period?
c Use calculator recursion to apply the recurrence relation and determine the balance
of the annuity after five deposits.
d How much interest has been earned after five deposits have been made?

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 360 Chapter 9 ■ Annuities and perpetuities 9A

Example 3 5 An annuity can be modelled by the recurrence relations below.

CF
Deposit phase:   A0 = 40 000, An+1 = 1.0018 × An + 4500
Withdrawal phase:    A0 = P, An+1 = 1.0018 × An − 7500

where An is the balance of the investment after n monthly payments have been
withdrawn or deposited.
a For the deposit phase, calculate:
i the annual percentage rate of interest for this investment
ii the balance of the annuity after five months
b After five months, the annuity will enter the withdrawal phase.
i What is the monthly withdrawal amount?
ii What is the value of P?
iii What is the balance of the annuity after five withdrawals?
c How much interest has been earned:
i during the deposit phase?
ii during the withdrawal phase for five withdrawals?
iii in total over this period of ten months?

6 An annuity can be modelled by the recurrence relations below.

Deposit phase:    A0 = 265 000, An+1 = 1.0031 × An + 750
Withdrawal phase:    A0 = P, An+1 = 1.0031 × An − 1800

where An is the balance of the investment after n monthly payments have been
withdrawn or deposited.
a For the deposit phase, calculate:
i the annual percentage rate of interest for this investment
ii the balance of the annuity after three months
b After three months, the annuity will enter the withdrawal phase.
i What is the monthly withdrawal amount?
ii What is the value of P?
iii What is the balance of the annuity after three withdrawals?
c How much interest has been earned:
i during the deposit phase?
ii during the withdrawal phase for three withdrawals?
iii in total over this period of six months?

7
A superannuation annuity has a current balance of $125 000 and will earn interest at
the annual percentage interest rate of 3.38% per annum, compounding fortnightly.
Each fortnight, an employer deposits $ 695 into this account.

Let An be the balance of the annuity after n deposits.
a Construct a recurrence relation model for this annuity.
b Use calculator recursion to determine the number of deposits that are required to
raise the balance of the annuity above $130 000.
c How much interest is earned by this annuity after nine fortnights?
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 9A 9A Recursive model for annuities 361  

8 A sum of $32 000 is invested in an annuity and will earn interest at the annual

CU
percentage interest rate of 4.32% per annum, compounding monthly. Monthly
payments of $3500 will be withdrawn.
Let An be the balance of the investment after n payments.
a Construct a recurrence relation model for this annuity.
b Use calculator recursion to determine the number of payments until the balance of
the annuity first falls below $20 000.
c How many payments of $3500 can be withdrawn before the annuity is exhausted?
d After all payments of $3500 have been received, how much money is left in the
annuity?
e What is the final payment that can be received to fully exhaust the annuity?

9
The amount of $54 000 is invested in an annuity. This investment will increase with
monthly deposits of $1500 for a period of six months. After these six months, monthly
payments of $1800 will be withdrawn.

When deposits are being made, interest is earned at the annual percentage interest
rate of 7.68%. When withdrawals are being made, interest is earned at the annual
percentage interest rate of 7.56%.

Let An be the balance of the investment after n payments.
a Construct a recurrence relation model for the deposit phase of this annuity.
b Find the balance of the annuity at the end of the deposit phase.
c Construct a recurrence relation model for the withdrawal phase of this annuity.
d How much interest is earned in total after these twelve months of investment?

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 362 Chapter 9 ■ Annuities and perpetuities

9B Investigating annuities
▶▶Payment schedules for annuities
Deposit phase
Consider an annuity with principal $200 000. Interest will be charged at the rate of 1.05%
per month and a deposit of $3000 will be made every month.
The calculation of the balance of the annuity after the first deposit has been made is shown here.

Principal Add interest Add New

(1.05%) deposit balance

$200 000 $2100 $3000 $205 100

The calculation of the balance of the annuity after the second deposit has been made is
shown here.

Previous Add interest Add New

balance (1.05%) deposit Balance

$205 100 $2153.55 $3000 $210 253.55

It is convenient to record all of the results of these calculations in a payment schedule.

A payment schedule for the first three months of this annuity is shown below.

Payment Deposit Interest Principal Balance of

number amount increase annuity
0 0 0 0 200 000.00
1 3000.00 2100.00 5100.00 205 100.00
2 3000.00 2153.55 5153.55 210 253.55
3 3000.00 2207.66 5207.66 215 461.21
Note: Some of the money values in the payment schedule have been rounded to the nearest cent and may
differ slightly to the values calculated using a recurrence relation model. The payment schedule values are
rounded after every calculation (if necessary) while the recurrence relation calculations are not.

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 9B Investigating annuities 363  

Constructing a payment schedule for an annuity (deposit phase)

At each step of the investment:

1 interest earned = interest rate per compounding period × current balance

For example, before deposit 2 is made:
interest earned = 1.05% of $205 100.00 = $2153.55
2 principal increase = deposit + interest
For example, after deposit 2 is made:
principal increase = $3000 + $2153.55 = $5153.553
3 balance of annuity = previous balance + principal increase
For example, after deposit 2 is made:
balance = $205 100.00 + $5153.55 = $210 253.55
4 total interest earned = (balance − principal) − total deposits made

Withdrawal phase
Consider an annuity with principal $200 000. Interest will be charged at the rate of 1.05%
per month and a payment of $4000 will be withdrawn every month.
To calculate the amount still invested in the annuity after the first payment:
Payment of $4000
Add interest From From New
Principal
(1.05%) interest principal balance
$200 000 $2100 $2100 $1900 $198 100
To calculate the amount still invested in the annuity after the second payment:
Payment of $4000
Previous Add interest From From New
balance (1.05%) interest principal Balance
$198 100 $2080.05 $2080.05 $1919.95 $196 180.05
It is convenient to record all of the results of these calculations in a payment schedule. This
is very similar to the repayment schedules constructed for reducing-balance loans. The
payment schedule and repayment schedules differ only in the headings and interpretations
of the calculation results. The calculations are all performed in exactly the same way.
A payment schedule for the first three months of this annuity is shown below.
Payment Payment Interest Principal Balance of
number withdrawn reduction annuity
0 0 0 0 200 000.00
1 4000.00 2100.00 1900.00 198 100.00
2 4000.00 2080.05 1919.95 196 180.05
3 4000.00 2059.89 1940.11 194 239.94
Note: Some of the money values in the payment schedule have been rounded to the nearest cent and may
differ slightly to the values calculated using a recurrence relation model. The payment schedule values are
rounded after every calculation (if necessary) while the recurrence relation calculations are not.

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 364 Chapter 9 ■ Annuities and perpetuities

Constructing a payment schedule for an annuity

At each step of the investment:

1 interest earned = interest rate per compounding period × current balance

For example, before withdrawal 2 is made:
interest earned = 1.05% of $198 100 = $2080.05
2 principal reduction = payment − interest
For example, after withdrawal 2 is made:
principal reduction = $4000 − $2080.05 = $1919.95
3 balance of annuity = previous balance − principal reduction
For example, after withdrawal 2 is made:
balance = $198 100 – $1919.95 = $196 180.05
4 total interest earned = total payments received − (principal − balance)

Example 4 Interpreting a payment schedule for an annuity in withdrawal phase

The payment schedule for the first six payments from an annuity are shown in the
table below. The interest compounds monthly and payments are also withdrawn
monthly.

Payment Payment Interest Principal Balance of

number withdrawn reduction annuity
0 0 0 0 65 000.00
1 1500.00 455.00 1045.00 63 955.00
2 1500.00 447.69 A 62 902.69
3 1500.00 440.32 1059.68 61 843.01
4 1500.00 432.90 1067.10 60 775.91
5 1500.00 B 1074.57 59 701.34
6 1500.00 417.91 1082.09 58 619.25

a What is the principal value of this annuity?

b Calculate the annual percentage rate of interest for this annuity.
c Calculate the value of A, the principal reduction from payment number 2.
d Calculate the value of B, the interest earned before payment number 5.
e What is the total interest earned after 6 payments have been made?

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 9B Investigating annuities 365  

Solution
a The principal of the annuity is the The principal value of the annuity is $65 000.
balance after payment number 0.
b 1  Choose any quarter. Choose quarter 1.
Note: It is best to choose a year that does not
contain values calculated previously in the
question.
2 Write the interest amount as a interest amount
Interest rate = × 100%
percentage of the previous balance. previous balance
Note: Because the values in the table have been 455.00
= × 100%
rounded to the nearest cent, the interest rates 65000
calculated using each of the years may be slightly = 0.007
different.
3 Convert this quarterly interest Interest rate = 0.007 × 12
rate to an annual interest rate by = 8.4% per annum
multiplying by 12 (12 months
per year).
4 Write your answer. The annual percentage rate of interest for this
annuity is 8.4%.
c Principal reduction = payment A = $1500 − $447.69
withdrawn − interest charged = $1052.31
d The interest earned before payment 8.4
B= × $60 775.91
number 5 is the interest rate percentage 12 × 100
of the balance after payment number 4, = $425.43
rounded to the nearest cent.
1 Alternative solution B = $1500 − $1074.57
2 Interest = payment − principal = $425.43
reduction
e 1 Calculate the total payments Total payments received
received. = 6 × $1500
= $9000
2 Calculate the total interest earned. Total interest
Note: this answer can be verified by adding the = total payments − (principal − balance)
interest amounts from the interest column of the = $9000 − ($65 000 − $58 619.25)
payment schedule. = $2619.25

The payment schedule for an annuity in deposit phase shows that after each successive
deposit, the amount of interest that is earned increases. This is because the balance of the
investment is increasing over time meaning more and more interest is earned.

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 366 Chapter 9 ■ Annuities and perpetuities

The payment schedule for an annuity in withdrawal phase shows that after each successive
withdrawal, the amount of interest that is earned decreases. This is because the balance is
decreasing over time meaning less and less interest is earned.

If the annuity continues in deposit phase, it An

will continue to grow in value indefinitely.
10
At some point in the investment, however, 9
it is usual for it to enter withdrawal phase, 8
7
typically to provide an income for the 6
investor. The longer the annuity exists in 5
withdrawal phase, the more of the balance 4
3
is required to make the regular payment and 2
so the balance of the annuity decreases more 1
rapidly later in the life of the annuity than 0 n
0 1 2 3 4 5 6 7 8 9 10
it did in the early stages, as shown in the
example graph on the right.
The green dots represent the balance of the investment during the deposit phase. After each
additional deposit, the amount of interest earned increases.
The blue dots represent the balance of the investment during the withdrawal phase. After
each withdrawal is made, the amount of interest earned decreases.

▶▶Investigating the effect of the payment amount on the

duration of an annuity
As you have seen, the calculations used to create repayment schedules for reducing-balance
loans and payment schedules for annuities in the withdrawal phase are very similar. The
only difference is the interpretation of the quantities involved. A payment withdrawn from
an annuity has the same effect on the balance of that annuity as a repayment does on a
reducing-balance loan. The only difference is that the annuity balance is money that you are
owed, and a reducing-balance loan balance is money the bank is owed.
Because of the similarities in calculation, the reducing-balance loan spreadsheet can be used
to perform the interest calculations of an annuity in the withdrawal phase, with only small
alterations to the column headings.
Spreadsheet Spreadsheet activity 9B: Payment schedule for an annuity

i
Investigation 9B: How does the withdrawal amount affect the length of an annuity here?
In general, increasing the payment withdrawn results in a shorter term of the investment.
The funds will not last as long as if the payment withdrawn was smaller.

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 9B 9B Investigating annuities 367  

Exercise 9B
Constructing a payment schedule for an annuity in growth phase
1 Create a payment schedule for the following annuities in growth phase, showing five deposits.

SF
a Initial balance of $50 000 earning interest at the rate of 3.2% per annum,
compounding quarterly, with deposits of $4000 per quarter.
b Initial balance of $135 000 earning interest at the rate of 4.32% per annum,
compounding monthly, with deposits of $1200 per month.

Constructing a payment schedule for an annuity in withdrawal phase

2 Create a payment schedule for the following annuities in withdrawal phase, showing
five withdrawals.
a $25 000 earning interest at the rate of 6.9% per annum, compounding monthly,
with payments of $1000 per month.
b $380 000 earning interest at the rate of 4.8% per annum, compounding quarterly,
with payments of $12 000 per quarter.
Example 4 3 A payment schedule for the first five withdrawals from an annuity is shown below.

CF
The interest compounds monthly and payments will be withdrawn after each month.

Payment Payment Interest Principal Balance of

number withdrawn reduction loan
0 0 0 0 164 000.00
1 3500.00 787.20 2712.80 161 287.20
2 3500.00 774.18 2725.82 158 561.38
3 3500.00 761.09 2738.91 155 822.47
4 3500.00 747.95 2752.05 153 070.42
5 3500.00 734.74 2765.26 150 305.16

a What is the principal of the investment?

b What is the annual percentage rate of interest for the investment? Round your
answer to one decimal place.
c What is the balance of the investment after three payments have been withdrawn?
d How much interest was received before the fourth payment?
e By how much did the fifth payment reduce the balance of the loan?
f Complete the following.
i Calculate the total interest earned after five payments.
ii Verify your answer to f i above by adding values from the interest column of the table.
g Construct the next two rows of this payment schedule.

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 368 Chapter 9 ■ Annuities and perpetuities

9C Solving problems involving annuities with technology

*An online update is available in the Interactive Textbook
Annuities are often used for long-term investments that involve many payments. Modelling
these investments with recurrence relations is cumbersome because of the number of
calculations that must be performed. Similarly, a payment schedule for an annuity that has a
life of many years would be large and difficult to manage.
Problems involving annuities with a large number of payments can be solved using a
variation of the annuities formula (studied in Chapter 8) or with the use of technology.

▶▶The annuities formula

The annuities formula can be used to find the balance of an annuity investment after n
payments have been received.

The annuities formula

Let P be the principal amount of the annuity.
Let n be the total number of compounding periods.
Let A be the balance of the annuity after n deposits.
Let i be the decimal interest rate per compounding period.
Let M be the amount of each deposit or withdrawal.
The balance of the annuity after n compounding periods is
Deposit phase:
((1 + i) n − 1)
A=M (for principal = $0)
i
((1 + i) n − 1)
A = P(1 + i) n + M
i
Withdrawal phase:
((1 + i) n − 1)
A = P(1 + i) n − M
i

Example 5 Using the annuities formula

Edward is starting a new job. His salary each week will be $495 and his employer will
pay 9% of this into a superannuation account for him. This superannuation fund will
earn interest at the rate of 4.16% per annum, compounding weekly.
a How much money will Edward’s employer deposit into the account each week?
b Assume that the interest rate for this account does not change. Calculate the balance
of Edward’s superannuation account after 15 weeks of work.

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 9C Solving problems involving annuities with technology 369  

Solution
a 1 Each deposit, M, is 9% of M = 9% of $495.00
Edward’s salary. 9
= × $495.00
100
= $44.55
2 Write down your answer. Each week, Edward’s employer will deposit $44.55 into
Edward’s superannuation account.
b 1 Write down the value of i 4.16% per annum compounding weekly
and n. 4.16
i=
52 × 100
= 0.0008
n = 15
2 Apply the annuities formula ((1 + i) n − 1)
to calculate A. A=M
i
((1 + 0.0008) 15 − 1)
= 44.55 ×
0.0008
= 672.0052…
3 Write your answer, rounding After 15 weeks, the balance of Edward’s superannuation
to the nearest cent. account is $672.01.

Example 6 Using the annuities formula

Wendy invested her superannuation funds of $375 000 in an annuity that will pay her
interest at the rate of 6.12% per annum, compounding monthly. Wendy will withdraw a
monthly payment of $4000 from this investment. Use the annuities formula to calculate
the balance of Wendy’s investment after 10 years.

Solution
1 Write down the values of P = 375 000.00
P, i, M and n. 6.12
i= = 0.0051
12 × 100
M = 4000.00
n = 10 × 12 (10 years of monthly repayments)
= 120
((1 + i) n − 1)
2 Apply the annuities formula A = P(1 + i) n − M
i
to calculate A.
= 375 000 × (1 + 0.0051) 120
((1 + 0.0051) 120 − 1)
− 4000
0.0051
= 30 664.83067
3 Write your answer, rounding After 10 years, the balance of Wendy’s investment is
to the nearest cent. $30 664.83.
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 370 Chapter 9 ■ Annuities and perpetuities

The annuities formula is very easy to use to calculate the balance of an annuity investment
given all of the other values for the investment. It isn’t as easy to use to calculate other
values such as the number of compounding periods, withdrawal amount or interest rate.
These sorts of problems can easily be solved using technology.

▶▶Solving annuity problems using technology

Annuity calculations involve six different values:

■■Principal
■■Annual interest rate
■■Number of compounds per year
■■Future balance after n compounds
■■n, the number of compounds that will be considered
■■Withdrawal amount
If the number of compounds per year is known, along with any four other values, the sixth
can be calculated using technology such as a CAS calculator, online calculation tool or a
spreadsheet.
Spreadsheet Spreadsheet activity 9C: Annuity Calculator

Using the Annuity Calculator spreadsheet

The Annuity Calculator
is shown here. It works
in the same way as the
reducing-balance loan
calculator from Chapter 8.
Click the ‘Clear’ button
before every calculation.
Enter the five known
quantities into the
spreadsheet and click
the ‘Calculate’ button
next to the quantity that
you want to find. It will
appear in the box.

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 9C Solving problems involving annuities with technology 371  

Example 7 Solving annuity problems using a spreadsheet

Nino has $475 000 to invest in an annuity. His investment will earn interest at the rate of
5.2% per annum, compounding quarterly and Nino plans to withdraw $12 000 from his
investment every quarter.
a Verify that Nino’s investment will last for a period of at least ten years.
b How many payments of $12 000 will Nino be able to withdraw?
c What is the final withdrawal that Nino can make?
d If Nino withdraws $10 000 each month instead of $12 000, how much longer will his
investment last?

Solution
Spreadsheet a 1 I dentify the known Principal = $475 000
quantities. Compounds per year = 4 (quarterly)
Percentage annual rate of interest = 5.2%
Number of compounding periods = 40 (10 × 4
quarters)
Quarterly withdrawal = $12 000
2 Calculate the balance after
ten years.
3 Click ‘Clear’ on the annuity
spreadsheet and enter the
known quantities.
Note: Type the numbers into the
balance and principal boxes without
the dollar sign or thousands comma.
When you press Enter, the value will
automatically be shown in currency
format.
4 Click ‘Calculate’ next to
future balance. The value of
the balance after ten years
will be automatically entered.
Note: this balance amount is a rounded
value.

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 372 Chapter 9 ■ Annuities and perpetuities

5 If the balance of the annuity The balance after ten years is positive.
is positive, the annuity will
last for at least ten years.
6 Write your answer. The balance of Nino’s investment after ten years is
­positive and so his investment will last for at least
ten years.
b 1 C
 lick ‘Clear’ and add all
known values to calculate
the number of compounding
periods (number of
withdrawals). Make the
future balance equal to zero
to calculate the number of
possible withdrawals.

2 Click ‘Calculate’ next to

number of compounds.

3 Write your answer. Nino’s investment will allow 55 withdrawals

Note: the number of compounds must of $12 000.
be rounded down to 55. The 56th
withdrawal will need to be smaller than
usual.
c 1 U
 se the spreadsheet to
calculate the future balance
after 56 withdrawals.

2 Calculate the 56th and final Final withdrawal = $12 000 − $517.96
withdrawal amount. = $11 482.04
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 9C Solving problems involving annuities with technology 373  

d 1 Use the spreadsheet to

calculate the number of
$10 000 withdrawals that are
possible.

2 Compare the two options. $12 000 withdrawals will last for 55 quarters + 1
Note: The same result is obtained smaller withdrawal.
by subtracting the total number of $10 000 withdrawals will last for 74 quarters + 1
repayments. The number of extra
smaller withdrawal.
withdrawals = 75 − 56 = 19.
Extra withdrawals = 74 − 55
= 19
3 Write your answer. Nino’s investment will last an extra 19 quarters if he
withdraws $10 000 per quarter instead of $12 000.

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 374 Chapter 9 ■ Annuities and perpetuities 9C

Exercise 9C
Using the annuities formula
Example 5 1 Use the annuities formula to find the balance of each of the following annuities (initial

SF
principal = $0) after the given number of compounding periods. Round your answers
to the nearest cent.
Annual ­percentage Compounding Payment per Balance
rate of interest period ­compounding period after …
a 4.14% Monthly $800.00 8 months
b 5.25% Monthly $480.00 2 years
c 6.03% Quarterly $2500.00 8 years
d 4.28% Quarterly $1800.00 5 years
e 6.14% Weekly $100.00 2 years

Example 6 2 Use the annuities formula to find the balance of each of the following annuities in the
withdrawal phase after the given number of compounding periods. Round your
answers to the nearest cent.

Principal Annual Compounding Payment per Balance

­percentage period compound- after …
rate of ing period
interest
a $160 000.00 4.14% Monthly $2500.00 8 months
b $375 000.00 5.25% Monthly $4800.00 2 years
c $415 000.00 6.03% Quarterly $8400.00 8 years
d $520 000.00 4.28% Quarterly $9700.00 5 years
e $256 000.00 6.14% Weekly $500.00 2 years

Solving annuity problems using technology

Example 7 3 Leigh invests $64 000 in an annuity and will be charged interest at the rate of 6.25%
CF

per annum, compounding monthly. Leigh will withdraw $1275 per month.
a How many withdrawals of $1275 will Leigh be able to make?
b His final withdrawal will be smaller than $1275. What is the value of this final
payment?
c What is the total interest that Leigh has earned from this investment?

4 Raj invests $85 500 in an annuity that will pay interest at the rate of 7.25% per annum,
compounding quarterly. If Raj receives a regular quarterly payment of $5000, how
many payments in total will he receive?

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 9C 9C Solving problems involving annuities with technology 375  

5 Stephanie invests $40 000 in an annuity and would like to receive a monthly payment
for exactly 10 years. Interest on her investment is earned at the rate of 7.5% per
annum, compounding monthly.
a How many payments will Stephanie receive?
b The last of these payments will be smaller than all of the others.
i What is the value of the usual payment? Round your answer to the nearest cent.
ii What is the value of the final payment? Round your answer to the nearest cent.
c What is the total interest that Stephanie will earn from her investment?

6 Kaspar has an annuity investment that earns interest at the rate of 8.16% per annum,
compounding monthly, from which he receives a monthly payment of $3600. The
balance of Kaspar’s investment was $391 262.50 after the first two years.
a What was the principal of Kaspar’s investment?
b How much interest has Kaspar earned after two years?

7 Simon has an annuity investment of principal $480 000, from which he receives a
payment of $1250 per week. The balance of Simon’s investment is $439 252.37 after
the first year of payments.
a What is the annual interest rate for Simon’s investment?
b Calculate the balance of Simon’s investment after two years.
c How many payments in total can Simon expect before his investment is fully
exhausted?
d If the interest rate on Simon’s investment decreases by 0.2%, and if Simon
continues to withdraw $1250 per week, how many fewer payments will he receive
compared to the number of payments calculated in 7c above?

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 376 Chapter 9 ■ Annuities and perpetuities

9D Perpetuities
▶▶Investigation
This section can begin with an investigation.
Spreadsheet Spreadsheet activity 9D-1: Payment schedule for an annuity
i
Investigation 9D: Investigating payments withdrawn from an annuity.
For any annuity in withdrawal phase, there exists a withdrawal amount for which the
balance of the annuity does not change over time. A withdrawal higher than this will result
in a balance that decreases over time, eventually to zero. A withdrawal lower than this will
result in a balance that increases over time.

▶▶Perpetuities
An annuity that has regular withdrawals of a value equal to the interest earned after one
compounding period is called a perpetuity. As observed in the investigation above,
the balance of an annuity will remain constant forever, or in perpetuity, if the payment
withdrawn is the same as the interest earned. This means that, while the investment remains
in place, the regular payment can be withdrawn for as long as required.

Example 8 Calculating the payment withdrawn from a perpetuity

A university has invested $80 000 into a perpetuity, the interest from which will provide
an annual prize for one of their students. The investment earns interest at the rate of
8.4% per annum, compounding yearly.
What is the value of the student prize?

Solution
1 The interest each year is 8.4% of the Interest = 8.4% of $80 000
principal. 8.4
= × $80 000
100
= $6720
2 Write your answer. The annual student prize has value $6720.

The payments withdrawn from a perpetuity are equal in value to the interest that is earned
after each compounding time period. This means that the balance of the perpetuity does not
change.

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 9D Perpetuities 377  

Perpetuities
Let A be the future value of the perpetuity after n payments have been withdrawn.
Let n be the total number of compounds.
Let P be the principal amount of the investment.
Let i be the decimal rate of interest per compounding period.
Let d be the payment withdrawn after each compounding period.
The balance of a perpetuity investment is constant and equal to the principal, A = P
d d
d = i × P    P =     i =
i P

Example 9 Calculating the payment withdrawn from a perpetuity using a

recurrence relation

The balance of an annuity investment after n months, An, is modelled by the recurrence
relation below.
A0 = 500 000, An+1 = 1.005 × An − d
What payment should be withdrawn from this investment every month if the payments
are to be withdrawn in perpetuity?
Solution
There are two ways to solve this problem. One involves an interest calculation and the
other uses the rule for the recurrence relation.
Method 1
1 Calculate the interest rate i using the 1.005 = 1 + i
multiplying factor from the recurrence i = 1.005 − 1
relation. i = 0.005
2 Calculate the payment withdrawn. d=i×P
= 0.005 × 500 000
= 2500
3 Write your answer. The payment withdrawn from this
­perpetuity investment should be $2500.

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 378 Chapter 9 ■ Annuities and perpetuities

Method 2
1 The balance of the perpetuity is always An+1 = 1.005 × An − d
equal to P.
2 Write the recurrence relation with An and P = 1.005 × P − d
An+1 both equal to P.
3 Use the value of P(A0) from the recurrence 500 000 = 1.005 × 500 000 − d
relation.
4 Solve for d d = 1.005 × 500 000 − 500 000
d = 2500
5 Write your answer. The payment withdrawn from this
­perpetuity investment should be $2500.

Example 10 Calculating the investment required to establish a perpetuity

How much money will need to be invested in a perpetuity account, earning interest at the
rate of 4.2% per annum compounding monthly, if $200 will be withdrawn every month?
Round your answer to the nearest cent.

Solution

1 Write down the values of i and d.

4.2
i= = 0.0035
12 × 100
d = 200
2 Use the rule to calculate the principal. d
P=
i
200
=
0.0035
= 57 142.85714
3 Write your answer, rounding to the The principal invested in this perpetuity
nearest cent. should be $57 142.86

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 9D Perpetuities 379  

Example 11 Calculating the interest rate required for a perpetuity

A university mathematics faculty has $30 000 to invest. It intends to award an annual
mathematics prize of $1500 to a student using the interest from this investment. If
the award is to be made in perpetuity, what is the annual interest rate required for this
investment?

Solution
1 Write down the values of P and d. P = 30 000
d = 1500
2 Use the rule to calculate the decimal rate of d
i=
interest per compounding period. p
1500
=
30000
= 0.05
3 Convert the value of i to an annual Annual percentage interest
percentage rate. rate = 0.05 × 1 × 100%
(one compound per year)
= 5%
4 Write your answer. The annual interest rate required for this
perpetuity investment is 5% per annum.

Perpetuities are just special cases of annuities in withdrawal phase. The payment that is
withdrawn just happens to be the same as the interest that is earned after each compounding
period. The spreadsheet ‘Annuity Calculator’ can be used to solve problems involving
perpetuities.
Spreadsheet Spreadsheet activity 9D-2: Annuity Calculator

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 380 Chapter 9 ■ Annuities and perpetuities

Example 12 Using technology to solve a problem involving a perpetuity

investment

A university mathematics faculty has $30 000 to invest. It intends to award an annual
mathematics prize of $1500 to a student using the interest from this investment. If the
award is to be made in perpetuity, use technology to find the annual interest rate required
for this investment.

Solution
Spreadsheet 1 Write down the values of P P = 30 000
9D-2
and d. d = 1500
2 Enter values into the spreadsheet.
Note: The number of compounds is
entered as ‘1’. The balance of the
perpetuity will be the same no matter
how many compounding periods are
considered.
The future balance is the same as the
principal for a perpetuity.
The compounds per year is 1 because
the payment is withdrawn after one
compounding period.
3 Click ‘Calculate’ to find the
annual interest rate required.

4 Write your answer. An interest rate of 5% per annum is required for this
perpetuity investment.

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 9D 9D Perpetuities 381  

Exercise 9D
Example 8 1 Craig has won $1 000 000 in a lottery and has decided to invest this money in a

SF
perpetuity that pays interest at the annual percentage rate of interest of 5.75%,
compounding monthly.
a What is the monthly payment that Craig can withdraw from his investment?
b Use technology to verify your answer to 1a above.

2 Suzie has invested her inheritance of $642 000 in a perpetuity that pays interest at the
rate of 6.1% per annum, compounding quarterly.
a What quarterly payment does Suzie receive?
b After five quarterly payments, how much money remains invested in the
perpetuity?

3 Geoff would like to establish a perpetuity, the interest from which will be donated to
the RSPCA. He would like the annual payment to be $2500. The perpetuity account
will pay interest at the rate of 2.5% compounding annually.
a Use a rule to verify that Geoff will need $100 000 for this investment.
b Geoff only has $80 000 to invest. Use a rule to determine the interest rate that
Geoff would need to provide the annual payment to the RSPCA.
c Verify your answer to 3b above using technology.

4 Barbara would like to establish a scholarship that will reward the hardest working
mathematics student in Year 12 each year with a $500 prize.
a If the interest on her investment is 2.7% per annum, how much should Barbara
invest?
b Barbara has $12 000 to invest in the perpetuity. What annual interest rate does
Barbara require in order to pay the prize in perpetuity? Round your answer to two
decimal places.
c Use technology to verify your answer to 4b above.

5 Kathy is a fan of the Brisbane Broncos. Her annual club membership costs $350.
CF

Kathy invests some money and intends to use the interest to pay her membership
every year in perpetuity. Assume that the membership fee remains the same from year
to year.
a If Kathy can invest her money to earn interest at the rate of 3.5% per annum,
compounding annually, what principal amount will she need? Round your answer
to the nearest cent.
b If Kathy paid her membership fee with quarterly instalments:
i what quarterly instalment would she pay to the club?
ii what quarterly interest rate (compounding quarterly) would be required from
her perpetuity investment?
iii calculate the equivalent annual percentage rate of interest for her investment.
c From your answers to 5b above, what impact does the number of compounds per
year have on the interest earned from a perpetuity?
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 382 Chapter 9 ■ Annuities and perpetuities
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Key ideas and chapter summary

Annuity An annuity is a type of compound interest investment from which either

AS a regular payment is withdrawn, or into which a regular payment is
deposited. The interest of an annuity is calculated on the balance of the
investment after each payment is withdrawn or deposited.

Recursive model A recurrence relation can be used to determine the balance of an annuity
for an annuity after n compounding periods.
If An is the balance of the annuity after n compounding periods, the
decimal rate of interest per compounding period is i and the regular
amount that is deposited or withdrawn after each compounding period is
d, then the recursive model for an annuity can have one of two forms:
Deposit:   A0 = principal of investment, An+1 = r × An + d
Withdrawal: A0 = principal of investment, An+1 = r × An − d
where r = 1 + i

Payment A table that summarises the interest calculations for an annuity is called
schedule for a payment schedule. A payment schedule shows the payment number,
an annuity withdrawal amount, interest paid, principal reduction and investment
­balance after each payment for some, or all, of the payments of an
annuity.

Annuities A formula that can be used to calculate the balance of an annuity after
formula n compounding periods, given the principal (P), decimal rate of interest
per compounding period (i), total number of compounding periods (n),
and payment amount (M). The annuities formula is:
((1 + i) n − 1)
Deposit:    A = M (for principal = $0)
i
((1 + i) n − 1)
       A = P(1 + i) n + M
i
((1 + i) n − 1)
Withdrawal:  A = P(1 + i) n − M
i

Total interest An annuity will earn interest in both deposit and withdrawal phases. If
I is the total interest earned by the annuity, An is the balance of the
annuity after n compounding periods and d is the amount of each regular
deposit or withdrawal, then:
I = An − n × d − A0 during the deposit phase
I = An + n × d − A0  during the withdrawal phase

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 Chapter 9 Review 383  

Review
Perpetuity A perpetuity is a special case of an annuity. The regular payment
withdrawn from a perpetuity is equal to the interest earned by the
­principal. The value of a perpetuity will remain constant.
The future value of a perpetuity is the same as the principal, A = P.
Given the decimal rate of interest per compounding period (i), the
­regular payment amount (d), or the principal (P) the rules that allow the
calculation of d, P and i are:
d d
d = i × P    P =     i =
i P

Skills check
Having completed this chapter, you should be able to

■■ use a recursive model to determine the balance of an annuity after n compounding

periods
■■ write a recursive model for an annuity
■■ construct and interpret a payment schedule for an annuity
■■ understand the effect of the repayment amount on the duration of an annuity
■■ analyse annuities with a spreadsheet
■■ use the annuities formula to determine the balance of an annuity after n compounding
periods
■■ solve annuity problems using technology (spreadsheet calculation tool)
■■ calculate the payment withdrawn from a perpetuity using a rule
■■ calculate the principal required by a perpetuity using a rule
■■ calculate the interest rate required by a perpetuity using a rule
■■ calculate the interest rate and principal for a perpetuity using technology (spreadsheet
calculation tool).

Multiple-choice questions
1 Julie has started a new job. She has a new superannuation account and her employer
will deposit $850 each month into this account. Assume that the money in this account
will earn interest at the rate of 8.28% per annum, compounding monthly. A recurrence
relation model for the balance of this investment after n months, An, is
A A0 = 0, An+1 = 1.0069 × An + 850
B A0 = 0, An+1 = 1.069 × An + 850
C A0 = 0, An+1 = 1.0828 × An + 850
D A0 = 0, An+1 = 1.69 × An + 850
E A0 = 0, An+1 = 1.828 × An + 850

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 384 Chapter 9 ■ Annuities and perpetuities
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Use the following information to answer questions 2 and 3.

An annuity is modelled by the recurrence relation shown below.
A0 = 386 000, An+1 = 1.0065 × An − 5600
where An is the balance of the investment after n months.

2 The balance of the investment after four months is:

A $370 342.77 B $373 514.93 C $376 666.59
D $379 797.91 E $382 909.00

3 The annual percentage rate of interest for this investment is:

A 1.5% B 5.4% C 6.5% D 7.8% E 17.4%
Use the following information to answer questions 4, 5 and 6.
A payment schedule for the first five payments from an annuity is shown below.

Payment Payment Interest Principal Balance of

number withdrawn earned reduction investment
0 0 0 0 285 000.00
1 5500.00 1653.00 3847.00 281 153.00
2 5500.00 1630.69 3869.31 277 283.69
3 5500.00 1608.25 3891.75 273 391.94
4 5500.00 1585.67 3914.33 A
5 5500.00 1562.97 3937.03 265 540.58

4 What is the principal amount for this annuity?

A $1653 B $3847 C $5500 D $281 153 E $285 000

5 What is the value of A, the balance of the annuity after payment 4?

A $261 626.25 B $267 891.94 C $269 477.61
D $269 500.19 E $271 806.27

6 The interest charged on this annuity compounds monthly and monthly payments are
received.
The annual percentage rate of interest for this annuity is closest to:
A 1.35% B 5.80% C 6.96% D 16.12% E 23.16%

7 Michelle will spend one year travelling the world. She invests $25 000 into an annuity
that earns interest at the rate of 7.08% per annum, compounding monthly. Michelle
expects to receive exactly 12 payments from this investment, the first 11 of which are
equal in value, before it is fully exhausted.
The monthly payment that Michelle receives is closest to:
A $1160 B $2160 C $3160 D $4160 E $5160

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 Chapter 9 Review 385  

Review
8 An annuity of principal $285 000 earns interest at the rate of 6.36% per annum,
compounding monthly. Monthly payments of $3200 are received from this investment.
After how many payments will the balance of this investment first be below $270 000?
A 6 B 7 C 8 D 9 E 10

9 A perpetuity will be set up to provide an annual prize of $400 to the best mathematics
student in a school. Interest will be earned on the principal of the investment at a rate
of 3.4% per annum and will be used to pay for the prize every year. The amount that
must be invested is closest to:
A $400 B $800 C $1176 D $11 765 E $136 000

10 A perpetuity has a balance of $120 000 after six years. Interest is earned at the
percentage annual interest rate of 5% per annum. The perpetuity is used to provide an
annual prize of value $6000.
After a further six years, what is the balance of the perpetuity?
A $84 000.00 B $86 654.33 C $120 000.00
D $123 563.76 E $168 243.44

Short-answer questions
1 An annuity in withdrawal phase is modelled using the recurrence relation shown below.

SF
A0 = 624 000, An+1 = 1.0013 × An − 2500
In the recurrence relation, An is the balance of the investment after n weekly
repayments.
a What is the principal of this investment?
b What is the value of the weekly payments withdrawn?
c What is the balance of this loan after six payments have been withdrawn?

2 Carys has $345 000 to invest in an annuity. Interest will be paid at the annual
percentage interest rate of 4.6%, compounding quarterly. Carys will withdraw
a payment of $12 000 per quarter from the investment.
Let An be the balance of Carys’ annuity after n quarters.
a Construct a recurrence relation model for the balance of Carys’ investment after
n quarters.
b Apply the recurrence relation to calculate the balance of Carys’ investment after
six payments have been withdrawn.
c How much interest will have been earned in total after six payments have been
received?

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 386 Chapter 9 ■ Annuities and perpetuities
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3 The payment schedule for an annuity with monthly payments is shown below.

Payment Payment Interest Principal Balance of

number withdrawn earned reduction investment
0 0 0 0 84 000.00
1 14 500.00 394.80 14 105.20 69 894.80
2 14 500.00 328.51 14 171.49 55 723.31
3 14 500.00 261.90 14 238.10 41 485.21
4 14 500.00 194.98 14 305.02 27 180.19
5 14 500.00 127.75 14 352.25 12 827.94
6 14 500.00 60.29 14 439.71 –1611.77

a What is the principal of this investment?

b What is the value of the monthly payment?
c Calculate the:
i monthly interest rate ii annual interest rate
d If this annuity was fully exhausted by the sixth payment, how much will this
payment be?

4 Michael’s employer has started a superannuation fund for him. Each month, $250 will
be placed in this account. If the money in the superannuation fund earns interest at the
annual percentage interest rate of 3.89%, compounding monthly, how much money is
in the account after five years? Round your answer to the nearest cent.

5 A university would like to establish a perpetuity, the interest from which will fund a
scholarship for a talented student each year. The value of this prize should be $3500 per year.
a If the interest on this investment is 3.6% per annum, how much will the university
need to invest?
The university only has $60 000 to invest.
b What annual interest rate is required to pay the scholarship in perpetuity? Round
your answer to two decimal places.
c Use technology to verify you answer to 5b above.

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 Chapter 9 Review 387  

Review
Extended-response questions
1 Mary has just started a new job. She will be paid a salary of $63 000 per year. Mary

CF
receives her salary as 12 equal payments on the first of every month. Mary’s employer
will pay 8.4% of her monthly salary into a superannuation account each month. The
money in this account earns interest at the rate of 1.8% per annum, compounding
monthly.
a What is Mary’s monthly salary
b How much will Mary’s employer pay into the superannuation account each month?
c Use the annuity formula (principal = $0) to determine the balance of Mary’s
superannuation account after:
i one full year of work
ii ten years of work

2 Henry has just started a new job. He will be paid a salary of $63 960 per year.
Henry receives his salary as 26 equal fortnightly payments. Every fortnight, Henry’s
employer will pay 7.8% of his fortnightly salary into a superannuation account. The
money in this account earns interest at the rate of 3.9% per annum, compounding
fortnightly.
a How much will Henry receive each fortnight?
b How much will Henry’s employer pay into the superannuation account each
month?
c Use the annuity formula (principal = $0) to determine the balance of Henry’s
superannuation account after:
i one year of work
ii five years of work.
Henry will add $100 of his own money into the superannuation account each
fortnight.
d Use the annuity formula (principal = $0) to determine:
i the balance of the superannuation account after one year with these extra
payments
ii how much higher the balance of the superannuation account will be after one
year with extra payments compared to the balance with no extra payments?

3 Ludwig inherited $150 000 from his aunt. He decided to invest this money into
an account that pays interest at the rate of 5.76% per annum, compounding monthly.
a If Ludwig’s account was a perpetuity, what monthly payment would he receive?
b If Ludwig’s account was an annuity and he withdrew $2000 per month:
i write a recurrence relation to model this annuity
ii how much money would be left in the account after 6 months?
iii how many months would it take for the balance of the investment to first fall
below $130 000?

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 388 Chapter 9 ■ Annuities and perpetuities
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c If Ludwig’s account was an annuity and he withdrew $4500 per month:

i how many payments of $4500 could he receive?
ii what would be the value of his final repayment if it was smaller than all
the others?

4 Jagathi receives monthly payments of $5250 from an annuity that is earning interest
at the rate of 5.28% per annum, compounding monthly. The balance of Jagathi’s
investment is $376 623.14 after three years of investment.
a What is the principal amount of Jagathi’s investment?
b How much interest has Jagathi earned after three years of investment?
c How many more payments of $5250 can Jagathi withdraw?
d What final amount can Jagathi withdraw to fully exhaust his annuity?

5 Ebrahim has recently retired and will invest his superannuation payment into an
annuity that will earn interest at the rate of 5.04% per annum, compounding monthly.
The principal amount of this investment will be $534 000.
a If Ebrahim withdraws a payment of $6000 per month, how many payments in total
can he expect to withdraw?
b What is the balance of Ebrahim’s investment after four years of
withdrawals?
Ebrahim decided to decrease his monthly payment after four years of investment.
He will withdraw monthly payments of $4500 until his investment is fully exhausted.
c How many payments of $4500 can he expect?
d What is the final amount that Ebrahim can withdraw to fully exhaust
his annuity?

6 Byron has begun a new job and a superannuation account was opened by his employer.

CU
Byron will be paid $1400 per fortnight. His employer will deposit 8% of his salary
into the superannuation account every fortnight.
Assume that the superannuation account earns interest at the annual percentage
interest rate of 2.1%.
a Use the annuities formula to determine the balance of Byron’s superannuation
account after one year of work.
After one year of work, Byron’s employer offers him a change of salary conditions.
Byron has a choice:
Option 1 – a salary of $1800 per fortnight with no change to superannuation
conditions.
Option 2 – a salary of $1600 per fortnight with 8.2% of salary deposited into the
superannuation account each fortnight.

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 Chapter 9 Review 389  

Review
b Which option would result in the greater amount of money deposited in the
superannuation account?
Assume that Byron chooses Option 1 and that the annual percentage interest rate of
the superannuation account remains constant at 2.1% per annum.
After ten years, Byron changes jobs. He transfers his superannuation balance to
a new account that earns interest at the rate of 2.4% per annum, compounding
monthly.
Byron’s new job pays a monthly salary of $3500 and his new employer will
contribute 9.4% of this salary to the superannuation account each month.
c   i Calculate the balance of Byron’s superannuation account after ten more years.
ii What total interest will Byron earn over the twenty-one years he will hold the
superannuation account?

7 Jarrod’s superannuation account has a balance of $250 000. His employer adds
$1000 to this account every month.
Jarrod’s superannuation fund pays him interest at the annual percentage interest rate of
3.36% with monthly compounds.
a If Jarrod intends to retire after a further 3 years, how much money will he receive
from his superannuation account?
b Jarrod will invest this money in an annuity that will pay interest at the annual
percentage interest rate of 4.08% with quarterly compounds. If he would like this
money to last for at least 15 years, what quarterly payment can he withdraw?

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 10
Chapter 10

Graphs and networks

UNIT 4 INVESTING AND NETWORKING

Topic 2 Graphs and networks

▶▶ How do we identify the features of a graph?

▶▶ How do we draw a graph?
▶▶ How do we apply graphs in practical situations?
▶▶ How do we construct an adjacency matrix from a graph?
▶▶ How do we define and draw a planar graph?
▶▶ How do we identify the type of path on a graph?
▶▶ How do we draw and use Eulerian graphs and Hamiltonian
cycles in practical applications?
▶▶ How do we find the shortest path between two vertices of
a graph?

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 10A Graphs and associated terminology 391  

10A Graphs and associated terminology

▶▶Representing connections with graphs
There are many situations in everyday life that involve connections between people or
objects. Towns are connected by roads, computers are connected to the internet and people
connect to each other through being friends on social media. A diagram that shows these
connections is called a graph.
Networks: Basic concepts Watch the video in the Interactive Textbook for an illustration of
the terms and concepts in action.

Vertices and edges

The graph below represents the connections between friends on a social media website.
There are six people in this graph and each person is Frances
represented by a dot called a vertex. Anna Brett
Each vertex in the graph is joined to some of the other
Ethan Cora
vertices (plural of vertex) by a line called an edge. Dario
These lines represent the connection between the people
represented by the vertices.
For example, the vertex for Anna is connected by an edge to the vertex for Brett, which
means Anna and Brett are connected as friends on the website.
There is no edge between the vertices for Frances and Cora, which means they are not
connected as friends on the website.

The degree of a vertex

The graph of the social media connections above shows that Frances
Anna has three friends, Frances, Brett and Ethan. There are Anna Brett
three edges that connect Anna to other people. This number
is called the degree of the vertex representing Anna. It is the Ethan Cora
number of times an edge connects to that vertex. Dario

In symbolic form, the degree of the vertex representing Anna can be written as
deg(Anna) = 3.

Loops
Imagine that Ethan is able to add himself as a friend on the Frances
social media website.
Anna Brett
The edge representing this connection would connect the Ethan
vertex representing Ethan back to itself. This type of edge is Cora
Dario
called a loop.
A loop is attached twice to a vertex and so it will add two to the degree for that vertex.
In this graph, deg(Ethan) = 4.
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 392 Chapter 10 ■ Graphs and networks

Representing connections with graphs

■■ A graph consists of vertices joined together by edges.
■■ The number of times an edge connects to a vertex is called the degree of that vertex.
■■ In symbolic form, the degree of vertex V is written as deg (V).
■■ A loop connects a vertex to itself.
■■ A loop connects twice to a vertex and so it will add two to the degree of that vertex.

Example 1 Drawing a graph to represent connections

Five people, Anthony, Ronnie, Robyn, George and Evan have accounts on a social media
website.
■■ Anthony is a friend of Robyn, Ronnie and Evan.
■■ Ronnie is a friend of everyone.
■■ Robyn is a friend of Anthony, Ronnie and Evan.
■■ George is a friend of Ronnie only.
■■ Evan is a friend of Anthony, Ronnie and Robyn.
a Draw a graph to represent the connections between the five people above.
b Write down the value of deg(Anthony).
c Which person has the vertex with the:
i smallest degree? ii largest degree?
Solution
a The graph must have an edge between: Robyn
••Anthony and Robyn
••Anthony and Ronnie
••
Anthony Evan
Anthony and Evan
••Ronnie and Robyn
••Ronnie and George
••Ronnie and Evan Ronnie George
••Robyn and Evan
There will be one edge for every pair of
people that are friends on the social media
website.
Note: The position of the vertices representing
the people do not have to be in the same position
as they are shown in the diagram. As long as
the edges connecting the people are the same,
the graph can be drawn with vertices in many
different positions.

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 10A Graphs and associated terminology 393  

Robyn

Anthony Evan

Ronnie George

b The vertex representing Anthony has deg (Anthony) = 3

three edge connections to it.
c i The vertex representing George has George has the vertex with the smallest degree.
only one edge connection to it, less deg (George) = 1
than all the other vertices, so it has
the smallest degree.
ii The vertex representing Ronnie has Ronnie has the vertex with the largest degree.
four edge connections to it, more deg (Ronnie) = 4
than all the other vertices, so it has
the largest degree.

▶▶Describing graphs
Graphs that represent connections between objects can take different forms and have
different features. This means that there is a variety of ways to describe these graphs.

Multiple edges and isolated vertices

The graph below shows six cities in Queensland represented as vertices and the major
highways connecting these towns represented as edges.
There are two different major highways that can be travelled to drive from Ipswich to
Toowoomba and the graph shows this using multiple edges. Multiple edges connect the
same two vertices in a graph.
Ipswich
Toowoomba
Westmar

Goondawindi
Warrick

Westmar is not connected to any of the cities by a major highway. In this graph, the vertex
representing Westmar is called an isolated vertex because it is not connected to any other
vertex in the graph. The degree of the vertex representing Westmar is zero.

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 394 Chapter 10 ■ Graphs and networks

The graph on the right is called a connected graph A B

because all of the vertices are connected in some way into G
the graph. There are no isolated vertices and no separate E I
F
parts.
The edge between vertex E and vertex F is called a C
D H
bridge. If this edge was removed, the graph would be
left with two separate parts and would no longer be
A B
connected. G
A bridge in a network is much like a bridge over a river. E I
F
If the bridge collapses, the two sides of the river are
disconnected. If we remove an edge that is a bridge in a C
graph, we are left with two separated parts of the graph. D H

Simple and complete graphs

Simple graphs do not have any loops and they do not have any multiple edges.
Complete graphs have an edge between every pair of vertices. Every vertex in a complete
graph is connected directly by an edge to every other vertex in the graph.
If all five people from Example 1 were friends with each other on the social media website,
the graph representing this would be both simple and complete, as shown below.

Robyn

Anthony
George

Evan
Ronnie

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 10A Graphs and associated terminology 395  

Directed graphs (digraphs)

A directed graph, or digraph, is a graph where there is a direction associated with the
edge. An edge of a directed graph is sometimes called an arc or a directed edge.
The directed graph below shows the food connections between some African animals and plants.
The arrow on the directed edge (arc) between the vertex representing wildebeest and the vertex
representing lion points towards the lion. This means that the lion eats the wildebeest.

Lion

Wildebeest
Baboon

Kudu

Caterpillar

Grass
Dung beetle Tree

Subgraphs
A subgraph is part of a larger graph. All of the edges and vertices in the subgraph must
exist in the original graph.
Lion Lion

Wildebeest Wildebeest

Kudu Kudu

Grass             Grass

The directed graph above shows only the The directed graph on the right contains
Wildebeest, Lion, Kudu and Grass. It is the same vertices, Wildebeest, Lion, Kudu
a small part of the graph from above. All and Grass, but there is an extra directed edge
of the vertices and directed edges (arcs) (arc) that shows the lion also eats grass. This
exist in the original graph and so this is a edge (arc) was not in the original graph and
­subgraph of the original food connection so this is not a subgraph of the original food
graph. connection graph.

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 396 Chapter 10 ■ Graphs and networks 

Example 2 Describing and interpreting graphs

A connected graph is shown on the right. A D
C
a Which two vertices have multiple edges between them?
B
F
b Draw a subgraph of this graph that only involves vertices E
A, B and C.

Solution
a Look for two or more edges that Vertex A and B are connected by two edges and
connect the same vertices. so have multiple edges between them.
b There are a few possible answers for A
A C C A C
this question. Some are shown on the
right. B B
B

Describing graphs
■■ A connected graph is a graph that has no isolated vertices and no separate parts.
■■ A bridge is an edge that, if removed, would cause the graph to no longer be connected.
■■ An isolated vertex is a vertex in a graph that is not connected to any other vertex by
an edge.
■■ The degree of an isolated vertex is zero.
■■ Multiple edges connect the same two vertices of a graph.
■■ Simple graphs do not have loops and do not have multiple edges.
■■ Complete graphs have an edge between every pair of vertices.
■■ Directed graphs (digraphs) have a directional meaning associated with the edges.
■■ The edges of a directed graph are called arcs or directed edges.
■■ Subgraphs are a small section of an existing graph, with no extra vertices and
no extra edges.

i
Investigation 10A: The shaking hands problem

The investigation above showed that each edge of a graph contributes two to the sum of the
degrees of the vertices. This can easily be verified by the fact that in order for an edge to
exist, it must involve two vertices.

In any graph, the sum of the degrees of the vertices is always twice the number of edges
in that graph.

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 10A 10A Graphs and associated terminology 397  

Exercise 10A
Describing graphs
Example 2 1 The graph below shows five towns, A, B, C, D and H, represented as vertices and the

SF
roads between the towns are represented by edges.
a Write down the degree of the vertex
Town B
representing: Town A Town C
i Town A Town D
ii Town B
iii Town H Town H
b i  How many edges are in this graph?
ii Using the result of the shaking hands problem, what will be the sum of the
degrees of the vertices in this graph?
iii Verify your answer to bii by adding all the degrees of the vertices.
c Draw a subgraph of this graph that contains only towns H, D and C.
d Which two towns are connected by the bridge in this graph?

2 The directed graph on the right shows Chelsea Samantha

the results of a squash tournament. The
vertices represent the people involved in the
tournament and the arcs represent the games
between the two people whose vertices are Eli
Wayne
joined by it. The arrow on the arc points to
the winner of the game.
a Who was the winner in the game Abby
between Chelsea and Samantha?
b Which player won all of their games?
c Which player lost all their games?
d Write down:
i deg(Samantha)
ii deg(Eli)

Drawing graphs
3 Draw a graph that has:
CF

a three vertices, two of which have an odd degree

b four vertices and five edges, one of which is a loop
c six vertices, one of which is isolated, and eight edges
d six vertices, two of which have an odd degree, and which contain at least one
subgraph that is a triangle

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 398 Chapter 10 ■ Graphs and networks 10A

Example 1 4 A national park in Africa contains a number of animal species. In the park:
■■ lions eat impala
■■ leopards eat impala and warthogs
■■ warthogs eat lizards
■■ lizards eat flies
■■ eagles eat lizards and small birds
■■ small birds eat lizards and flies
a Draw a directed graph to represent the information above. Use a vertex to
represent each animal and an arc to represent the connection between them. The
arrow of the arc should point to the animal that eats the other.
b Write down deg(Warthogs).
c Draw a subgraph that contains only lizards, flies, small birds and eagles.

5 Complete the following for a graph.

SF

a Draw a complete graph that has 6 vertices.

b How many edges does this graph have?

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 10B The adjacency matrix 399  

10B The adjacency matrix

Vertices in a graph that are connected by an edge are said to be adjacent to, or next
to, each other. A matrix can be used to record which vertices are adjacent to each other
and also the number of connections between adjacent vertices. This matrix is called an
adjacency matrix.

▶▶Adjacency matrices for simple graphs

Consider the simple graph that shows the social media connections between people from
earlier in the chapter. For the purposes of creating an adjacency matrix for this graph, we
will represent the vertices with the first letter of the names of the people. For example, Anna
will be represented by A, Brett will be represented by B and so on.
The graph and the adjacency matrix for that graph are shown below.
A B C D E F
A 0 1 0 0 1 1 F
B 1 0 1 0 0 1
A B
C 0 1 0 1 1 0
      
D 0 0 1 0 0 1 E
E 1 0 1 0 1 0 C
F 1 1 0 1 0 0 D

The adjacency matrix has:

■■six rows and six columns, one for each vertex of the graph
■■row and column labels that match the vertices of the graph
■■a ‘0’ in the intersection of row A and column C because there is no edge connecting
A to C
■■ a ‘1’ in the intersection of row B and column F because there is one edge connecting
B to F
■■ a ‘0’ in the intersection of row D and column D because there is no edge connecting
D to D (that is there is no loop at vertex D)
■■ a ‘1’ in the intersection of row E and column E because there is one edge connecting
E to E (that is there is a loop at vertex E).

The number of edges between every other pair of vertices in the graph is recorded in the
adjacency matrix in the same way. Notice that the adjacency matrix is symmetric about the
main diagonal. This means that the number in row m, column n is the same as the number in
row n, column m.

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 400 Chapter 10 ■ Graphs and networks

Example 3 Drawing a graph from an adjacency matrix

Draw the graph that has this adjacency matrix. A B C D E
A 0 0 2 0 1
B 0 0 2 1 0
C 2 2 0 1 0
D 0 1 1 1 0
E 1 0 0 0 0
Solution
1 Draw a dot for each vertex and label them A to E. B
2 There is a ‘2’ in the intersection of row A D
A
and column C. This means that there are
two edges connecting vertex A and vertex C.
C
These will be multiple edges.
E
3 There is a ‘1’ in the intersection of row D
and column D. This means that there is a
loop at vertex D (vertex D is connected to
itself by a loop).
4 Look at every intersection of row and
column in the matrix and add edges to the
graph, if they do not already exist.
Note: The graph has been drawn so that the edges do
not cross over each other. This is not strictly necessary.

▶▶Adjacency matrices for directed graphs

An adjacency matrix can also be drawn to show the directed connections between vertices
in a directed graph. The adjacency matrix for a directed graph may be, but is not necessarily,
symmetric about the main diagonal.
The matrix labels for the rows of the matrix are the origin A B C D E
vertices for the arcs. The column labels in the matrix are A − − − − −
the destination vertices. The arrow on the arc will point B − − − 1 −
from the origin vertex (row) to the destination vertex origin C − − − − −
(column). D − 0 − − −
E − − − − −
In the graph for this adjacency matrix:

■■there is one arc from vertex B to vertex D, shown by a

‘1’ in row B, column D D
■■ there is no arc from vertex D back to vertex B shown by a ‘0’ in
B
row D, column B.
This means the arc between vertex B and vertex D has a directional arrow from B to D.

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 10B The adjacency matrix 401  

Example 4 Writing an adjacency matrix from a directed graph

A directed graph is used to represent the winners in a round robin sporting competition.
Each of the teams in the competition are represented by a vertex and the arc represents
the game between the two teams that it connects. The arrow on the arc points to the
winner of the game.
Use the graph on the right to Scorpions (S) Cobras (C)
answer the following questions.
a Which team was the winner
in the game between the
Grasshoppers and the Cobras?
b Which is the only team to beat
Grasshoppers (G) Lizards (L)
the Scorpions?
c Write down the adjacency
matrix for this graph.
Solution
a Look at the arc that joins the vertices for The Cobras won the game against the
Grasshoppers and Cobras. It is pointing Grasshoppers.
to the Cobras.
b Look at all the arcs connected to the vertex The Lizards are the only team to beat the
for Scorpions. The only one pointing to Scorpions.
Scorpions is from Lizards.
c In the matrix, use a ‘1’ for an arc that starts
S G C L
at the row team and points towards the S 0 1 1 0
column team. Otherwise, use a ‘0’.
G 0 0 1 1
Note: the vertices can be written in any order within
the row headings and column headings of the matrix, C 0 0 0 1
but it is usual to keep the order consistent between L 1 0 0 0
the rows and columns.

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 402 Chapter 10 ■ Graphs and networks 10B

Adjacency matrices
An adjacency matrix is a square matrix that summarises the connections between
vertices of a graph.
For undirected graphs:

■■ the entry in row m and column n shows the number of edges that join the vertices
from this row and column
■■ the adjacency matrix is symmetric about the main diagonal.
For directed graphs:

■■ the entry in row m and column n shows the number of arcs from the vertex in this row
to the vertex in this column
■■ the adjacency matrix may be, but is not necessarily, symmetric about the main
diagonal.
Loops are counted as one edge.

Exercise 10B
Writing adjacency matrices for graphs
1 For each of the following graphs, write down the adjacency matrix.

SF
a B D b A B

A C D
C

c A B d A B

C D
D C

e A f B
B E A
D

C
D F C

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 10B 10B The adjacency matrix 403  

Example 4 2 For each of the following directed graphs, write down the adjacency matrix.

a B b A

A
C

C D

c N d G

M
F
P
H
Q

e B f B
D
D
F
A
A
E
C
E
C

Drawing graphs from adjacency matrices

Example 3 3 Draw a graph for the following adjacency matrices.
a A B C b A B C D c A B C D
A 0 1 1 A 1 0 0 0 A 0 1 2 1
B 1 0 1 B 0 0 1 1 B 1 0 1 1
C 0 1 1 0 C 2 1 0 0
C 1 1 0
D 0 1 0 0 D 1 1 0 0

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 404 Chapter 10 ■ Graphs and networks 10B

4 Draw a directed graph for the following adjacency matrices.

a A B C b S T U
A 0 1 1 S 1 0 1
B 0 1 0 T 0 0 2
C 1 1 1 U 0 1 0

c P Q R S d P Q R S
P 0 1 1 1 P 1 1 0 1
Q 1 0 2 0 Q 0 0 1 1
R 1 0 0 1 R 1 1 0 1
S 0 0 1 0 S 1 0 0 0

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 10C Planar graphs and Euler’s formula 405  

10C Planar graphs and Euler’s formula

▶▶Planar graphs
Equivalent graphs
All of the graphs shown in the diagram below contain the same information. For example,
the edge between vertex E and C exists in all three of the graphs.
The physical location of the vertices and
B
edges in the diagram is unimportant. As long
as the connection information is represented C
A A
accurately, the graph can be drawn with the
vertices in any location. D E B
C
The first of the graphs has some curved
edges and the second has all straight edges.
D
The third has the vertices arranged in a E
straight line.
All of them, regardless of how they are A B C D E
drawn, contain exactly the same connections
between vertices and so these graphs are
considered to be equivalent to each other.
Equivalent graphs contain identical information and are sometimes called isomorphic
graphs.

Planar graphs
The graph opposite has two edges that cross over each other
(EB and AD). It is helpful to think of edges that cross like this as B
insulated electrical wires. It is quite safe to cross two insulated A
C
wires because the wires themselves never touch and never
interfere with each other. We can think of crossing edges in a D
E
graph in a similar way.
The edges that cross over in this diagram are similar in that they B
do not intersect. It is important to note that there is no vertex at the
A
point where these edges cross over. C

Graphs with edges that cross in this way may be able to be redrawn D
E
so that the edges no longer cross. In this diagram the edge between
vertices A and D has been moved, but none of the information in
the graph has changed.
A planar graph is a graph that can be drawn in such a way that the edges it contains do not
cross over each other. If a graph is drawn so that no edges cross over, then it is said to be
drawn in planar form.

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 406 Chapter 10 ■ Graphs and networks

If it is impossible to draw an equivalent graph without crossing edges, then that graph is
called a non-planar graph. It is impossible to draw a non-planar graph in planar form.

Example 5 Redrawing a graph in planar form

Show that this graph is planar by redrawing it so that B C
no edges cross.
A D

F E
Solution
1 Choose one of the edges that crosses over another B C
edge. For example, choose the edge between
vertex C and vertex E. Alternatively, the edge A D
between vertex A and vertex D could be chosen.
F E
2 Remove this edge temporarily from the graph. B C

A D

F E
3 Redraw the edge between the same two vertices B C
(C and E), but without the edge crossing any
other edge. A D

F E

▶▶Euler’s formula
Leonard Euler (pronounced ‘oiler’) was one of the most prolific mathematicians of all time.
He contributed to many areas of mathematics and his proof of the rule named after him is
considered to be the beginning of the branch of mathematics called topology.

Faces
A planar graph defines separate regions of
the paper it is drawn on. These regions, called C
B
faces, could be coloured in as you can see in D
the diagram shown here. There are three faces f1 f3
f2
inside the graph, one coloured cream, one f4
blue and one gold, but there is also a fourth A F
face coloured purple that totally surrounds E
the graph.

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 10C Planar graphs and Euler’s formula 407  

In the diagram, the faces are labelled f1, f2, f3 and f4.
A face is an area in a graph that can only be reached by crossing an edge.

Euler’s formula
For any connected planar graph, we can count the number of vertices (v), the number of
faces ( f ) and the number of edges (e). There is a relationship between these numbers,
called Euler’s formula.
In words: ‘the number of vertices + the number of faces – the number of edges = 2’
In symbols: v + f − e = 2

Euler’s formula
For any connected planar graph:
v + f−e = 2
where v is the number of vertices, f is the number of faces and e is the number of edges
in the graph.

Example 6 Verifying Euler’s formula

B C
For the graph shown on the right:
E
a redraw the graph in planar form
b verify Euler’s formula A D
Solution
a Temporarily remove an edge that B C B C
crosses another edge and redraw E E
it so that it does not cross another
edge. A D A D

b 1 
Count the number of vertices, In this graph, there are: five vertices, four faces
faces and edges in the graph. and seven edges.
2 Substitute into Euler’s formula v+f−e=5+4−7=2
to verify. Euler’s formula is verified.

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 408 Chapter 10 ■ Graphs and networks 10C

Example 7 Using Euler’s formula

A connected planar graph has six vertices and nine edges. How many faces does this
graph have?
Solution
1 Write down the known values. v = 6 and e = 9
2 Substitute into Euler’s formula and solve v+ f−e=2
for the unknown value. 6 + f − 9= 2
f − 3= 2
f = 2+ 3
f =5
3 Write your answer. This graph has five faces.

Exercise 10C
Equivalent (isomorphic) graphs
1 In each question below, three of the graphs are equivalent (isomorphic) and the fourth

SF
is not. Identify the graph which is not equivalent (isomorphic) to the others.

a i ii A iii iv A
B
B B
C B C

A A C
C

b i A B ii A iii A B iv
C A B C D
B C

D
D C
D

c i B ii B C
A
C E

D A
E D

iii B iv B
A C
E A
C D
D
E
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 10C 10C Planar graphs and Euler’s formula 409  

Drawing graphs in planar form

Example 5 2 Where possible, show that the following graphs are planar by redrawing them in a

CF
suitable planar form.
a A B C b A B

C E
F E D D

c D d B
C E A C

B F
E D
A

Euler’s formula
Example 6 3 For each of the following graphs:

SF
i state the values of v, e and f
ii verify Euler’s formula
a b c

Example 7 4 For a planar connected graph, find:

a f , if v = 8 and e = 10
b v, if e = 14 and f = 4
c f , if v = 5 and e = 14
d e, if v = 10 and f = 11

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 410 Chapter 10 ■ Graphs and networks

10D Exploring a graph

▶▶The language of exploring a graph
Graphs can be used to model and analyse problems involving exploring or travelling. These
problems can include minimising the distance travelled or minimising the time taken to
travel between different locations using different routes. For example, a courier driver
would like to know the shortest route to use for deliveries to minimise the total distance that
is driven.
To solve these types of problems, you will need to learn the language used to describe the
different ways of navigating through a graph, or exploring the graph, from one vertex to
another.
Museum (M)
The graph on the right shows
six tourist locations in a city
represented by vertices. The
edges of the graph represent
the roads between each of Shops (S) Art gallery (A)
the locations.
Gardens (G)
This graph will be used
to help explain the language
and define the terms used
to describe exploring a
graph. Railway station (R) Clocktower (C ) Temple (T )

Travelling through a network: Watch the video in the Interactive Textbook to see the five
types of routes that can be travelled through networks.

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 10D Exploring a graph 411  

Walks
On one tour, a tour guide meets a group of tourists at the Museum. The group will visit
the Art gallery, the Gardens and will finish at the Temple. The route that they take can be
written as a list of locations visited in order; that is, M – A – G – T.
A route through a graph, from one vertex to another along edges of the graph, is called
a walk.
The following routes are all walks:
S–A–C–T–G–A R–S–A–S–M–G T–G–G–A–C–T
Museum (M) Museum (M) Museum (M)

Art
Shops (S ) Art gallery (A) Shops (S) gallery (A) Shops (S) Art gallery (A)
Gardens (G) Gardens (G) Gardens (G)

Railway station (R) Clocktower (C ) Temple (T ) Railway station (R) Clocktower (C) Temple (T) Railway station (R) Clocktower (C) Temple (T )

This walk starts at the This walk starts at the This walk starts and ends
Shops (S) and ends at the Railway station (R) and at the Temple (T).
Art gallery (A). ends at the Gardens (G).
It starts and ends at the
It starts and ends at This route is also an open same vertex and is called a
­different vertices and is walk because it starts and closed walk.
called an open walk. ends at different vertices.
The route traverses the
Notice that the tour group Notice that the tour group loop at the Gardens and
will visit the Art gallery will traverse the road so the tour group will visit
twice. between the Shops (S) and the Gardens vertex (G)
Art gallery (G) twice. twice.

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 412 Chapter 10 ■ Graphs and networks

Trails and paths

Trails and paths are special types of walks:

■■A trail is a walk that has no repeated edges but may contain repeated vertices.
■■A path is a walk that has no repeated edges and no repeated vertices.
The following routes are all walks but may be trails, paths or neither.
S–A–C–T–G–A–M C–R–S–A–C–T–G– G–A–M–S–R–C–T
M–A–C
Museum (M) Museum (M) Museum (M)

Shops (S) Art gallery (A) Shops (S) Art gallery (A) Shops (S) Art gallery (A)

Gardens (G) Gardens (G) Gardens (G)

Railway station (R) Clocktower (C) Temple (T) Railway station (R) Clocktower (C) Temple (T ) Railway station (R) Clocktower (C) Temple (T )

This walk starts at the This walk starts and ends at This walk starts at the
Shops (S) and ends at the the Clocktower (C). Gardens (G) and ends at
Museum. the Temple (T).
It starts and ends at the
It starts and ends at same vertex and so it is a It starts and ends at
­different vertices and so it closed walk. ­different vertices and so it
is an open walk. is an open walk.
There are no repeated There are some repeated There are no repeated
edges and so this is a trail. edges (A – C) and so this is edges and so this is a trail.
neither a trail nor path.
There are repeated ­vertices There are no repeated
(A) and so this is not a vertices and so this is also
path. a path.

Walks, trails and paths

A walk is a route through a graph, from one vertex to another, along the edges of the
graph:

■■ an open walk starts and ends at different vertices

■■ a closed walk starts and ends at the same vertex.
A trail is a walk that has no repeated edges. It may have repeated vertices.
A path is a walk that has no repeated edges and no repeated vertices.

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 10D Exploring a graph 413  

Example 8 Describing walks

Identify the walk shown in each of the graphs below as a trail, a path or a walk only.
a Museum (M) b Museum (M) c Museum (M)

Art Art Art

Shops (S) gallery (A) Shops (S) gallery (A) Shops (S) gallery (A)
Gardens (G) Gardens (G) Gardens (G)

Railway station (R) Clocktower (C) Temple (T) Railway station (R) Clocktower (C) Temple (T ) Railway station (R) Clocktower (C) Temple (T)

Solution
a This walk has repeated vertices (A and G) This walk is a trail.
but no repeated edge.
b This walk has repeated vertices (S, M, A, C) This walk is a walk only.
and some repeated edges (M – A, A – C).
c This walk has no repeated vertices and no This walk is a path.
repeated edges.

Closed trails and cycles

If a walk starts and ends at the same vertex, then it is called a closed walk.
A closed walk will also be a closed trail if it has no repeated edges.
A closed walk will also be a cycle if it has no repeated edges and no repeated vertices,
except for the starting and ending vertex. Cycles are sometimes called closed paths.
The following routes are all closed walks but may also be closed trails or cycles.
A–C–R–C–T–C–A S–R–C–A–M–G–A–S A–S–M–G–T–C–A
Museum (M) Museum (M) Museum (M)

Art Art
Shops (S) Art gallery (A) Shops (S) gallery (A) Shops (S) gallery (A)
Gardens (G) Gardens (G) Gardens (G)

Railway station (R) Clocktower (C) Temple (T) Railway station (R) Clocktower (C) Temple (T ) Railway station (R) Clocktower (C) Temple (T )

This walk is a closed walk This is a closed walk This is a closed walk
because it starts and ends because it starts and ends because it starts and ends
at the same vertex (A). at the same vertex (S). at the same vertex (A).
There are repeated edges There is no repeated edge There is no repeated edge
so it is not a closed trail. so it is also a closed trail. so it is also a closed trail.
There are repeated vertices There are repeated v­ ertices There are no repeated
and repeated edges so it is so it is not a cycle. ­vertices (except for the
not a cycle. start and end vertex) and
so it is also a cycle.

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 414 Chapter 10 ■ Graphs and networks

Closed walks, closed trails and cycles

A closed walk is a walk that begins and ends at the same vertex.
A closed trail is a closed walk that has no repeated edges.
A closed path is a closed walk that has no repeated edges and no repeated vertex, except
for the starting and ending vertex. A closed path can also be called a cycle.

Example 9 Describing closed walks

Use the graph of six tourist Museum (M)
locations in a city shown on the
right to describe the following
walks as either a trail, path, closed
trail, cycle, open walk only or Shops (S) Art gallery (A)
closed walk only.
Gardens (G)
a M–G–G–A–S–R
b S–R–C–A–G–T–C–A
c C–M–S–R–C
Railway station (R) Clocktower (C) Temple (T)
d G–G–T–C–A–M–G
Solution
a This walk has repeated vertices (G). It starts This walk is a trail.
and ends at different vertices.
b This walk has repeated vertices (C) and repeated This walk is an open walk only.
edges (C–A). It starts and ends at different
vertices.
c This walk has no repeated vertices (except for the This walk is a closed path or cycle.
start and end vertex) and no repeated edge.
d This walk has repeated vertices (G). It starts This walk is a closed trail.
and ends at the same vertex.

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 10D 10D Exploring a graph 415  

Exercise 10D
Describing walks through a graph
Example 8 1 Describe the walk shown in each of the following graphs as a trail, path, closed trail,

SF
cycle, open walk only or closed walk only.
a start b
end
start
end

c d
start
start

end

end

e B f
E
start end
end
A
D
start
C
F

Example 9 2 Use the graph on the right to describe the walks below as a trail, path, closed path,
closed trail, cycle, open walk only or closed walk only.
a B–E–D–C–A–B
b A–B–E–B–C–D–E B
c F–E–B–F–E–D
d A–B–C–D–E–B–F F
e C–A–B–C–D–E–B–C A E
f D–E–B–A–C–D
C
D

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 416 Chapter 10 ■ Graphs and networks

10E Eulerian graphs and applications

▶▶The explorer problem
Consider a national park that contains a number of campsites and some roads that lead
between them. A park ranger might need to travel along each of these roads in order to
check their condition. It is in the best interests of the park ranger to minimise the number of
times each road is travelled and to avoid backtracking wherever possible. Ideally, each road
should be travelled only once.
This situation is an example of the explorer problem. The explorer problem asks the
question ‘Is it possible to travel every edge in a network only once?’
i
Investigation 10E: The explorer problem
Whether or not the explorer problem has a solution for a particular graph depends upon the
degrees of the vertices in that graph.

Eulerian graphs and Eulerian trails

In Investigation 10E above you may have noticed that if the degree of every vertex in the
graph was even, then the ranger could begin at any campsite, travel along every road only
once, and would end up back at the starting campsite. This is a closed trail that involves
every edge of the graph and can be called an Eulerian trail.
A graph that contains an Eulerian trail is called an Eulerian graph. A graph is Eulerian if
all of the vertices in that graph have even degrees.

Semi-Eulerian graphs
If there were two odd vertices in the graphs from Investigation 10E above, the ranger could
start at either one of these campsites, travel along every road only once, and would end up
at the other odd-degree campsite. This is an open trail that involves every edge of the graph.
A graph where such an open trail exists is called a semi-Eulerian graph. A graph is semi-
Eulerian if it contains exactly two vertices that have odd degrees and all other vertices with
even degrees.
Eulerian trails and circuits: Watch the video in the Interactive Textbook to see them in
action.

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 10E Eulerian graphs and applications 417  

Eulerian and semi-Eulerian graphs

Eulerian graphs:

■■ contain an Eulerian trail (a closed trail that involves every edge of the graph)
■■ have all vertices with even degree
■■ allow explorers to begin at any vertex, travel every edge only once and return to the
starting vertex.
Semi-Eulerian graphs:

■■ contain an open trail that involves every edge of the graph

■■ have two vertices with odd degree
■■ allow explorers to begin at one of the odd-degree vertices, travel every edge only once
and end at the other odd-degree vertex.
Eulerian and semi-Eulerian graphs must be connected.

Example 10 The explorer problem – Eulerian graphs

A map showing the towns of St Andrews, Kinglake, Yarra Glen, Toolangi and Healesville
is shown below.

a Draw a graph with a vertex representing each of these towns and with edges
representing the direct road connections between towns. Ignore any towns on the map
not listed in the question.
b Explain why this graph is semi-Eulerian and not Eulerian.
c i 
Write down an open trail that begins at Toolangi and follows every edge only once.
ii Explain how you could tell this trail would end at Kinglake.

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 418 Chapter 10 ■ Graphs and networks 10E

Solution
a A road connection exists between: Kinglake
Toolangi
•• St Andrews and Kinglake
•• St Andrews and Yarra Glen
•• Kinglake and Yarra Glen St Andrews

•• Kinglake and Toolangi Yarra Glen

•• Yarra Glen and Toolangi Healesville
•• Yarra Glen and Healesville
•• Healesville and Toolangi
b The graph has exactly two vertices with Graphs that have exactly two vertices with odd
odd degrees (Kinglake and Toolangi). degrees are semi-Eulerian.
c i T
 his question has many answers, one Toolangi – Healesville – Yarra Glen – Toolangi
of which is shown. – Kinglake – Yarra Glen – St Andrews
– Kinglake
ii Toolangi was one of the two vertices An open trail through a semi-Eulerian graph
with an odd degree. will start at one of the vertices with odd degree
and end at the other. Toolangi was one of the
vertices with odd degree and Kinglake was the
other, so the open trail must end at Kinglake.

Exercise 10E
Eulerian and semi-Eulerian graphs
Example 10 1 For each of the graphs shown below:

SF
i identify whether the graph is Eulerian, semi-Eulerian or neither
ii name any open or closed Eulerian trails found
a A B b B C c A B D F
F
C G
E E
H C
E D A D
d C e E A
B D
B
F

A E D C

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 10E 10E Eulerian graphs and applications 419  

2 A housing estate has large open parklands that contain seven large trees.

CF
The trees are denoted as vertices A to G on the graph below.

B
C

A F

D
G
E

Walking tracks link the trees and are shown as edges on the graph.
a Determine the degree of each of the vertices in the graph.
b One day, Jamie decided to go for a walk that will take him along each path only
once at most.
i At which vertices could Jamie start?
ii At which vertex will Jamie end?
c A new track is to be made between two trees. This track will mean that Jamie
could start at any vertex, walk along each of the tracks only once and return to his
starting point.
i Between which two vertices should the new track be made?
ii What is the name of the walk that Jamie will follow once the new track is
made?

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 420 Chapter 10 ■ Graphs and networks

10F Hamiltonian graphs and applications

▶▶The traveller problem
You have seen an application of graphs that involved tourists visiting a number of sites of
interest. A traveller in such a situation would be much more interested in seeing the sites at
the vertices of the graph, than the roads that connect them. The traveller problem involves a
situation where every vertex in a graph is visited once.
Unlike the explorer problem, the traveller problem does not have a set of rules to define
whether it has a solution. Rather, finding a route that allows a traveller to visit all vertices in
a graph relies purely on inspection.
i
Investigation 10F: The traveller problem

Hamiltonian graphs
In 1857, Hamilton’s puzzle
in Investigation 10F above
was commercially produced
as a board game called ‘The
Icosian Game’. The object of
the game was to find a route
through the graph that:

■■starts and ends at the same

vertex
■■ visits all vertices exactly
once (except for the start
Copyright (c) 2019 The Puzzle Museum – J. Dalgety
and end vertex).

The game consisted of a wooden board with holes at vertices. Numbered ivory plugs were
put into the board to mark out the route. There are only four of these games known to still
exist.
The solution to Hamilton’s puzzle is a path because it has no multiple edges and no multiple
vertices. The solution is also a cycle, because it starts and ends at the same vertex. Because
of this puzzle, any path through any graph that visits every vertex of the graph only once is
called a Hamiltonian path.
A Hamiltonian graph has a cycle (closed path) that visits every vertex only once. This
cycle is called a Hamiltonian cycle.
A semi-Hamiltonian graph has an open path that visits every vertex only once. This path is
called a Hamiltonian path.

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 10F Hamiltonian graphs and applications 421  

Hamiltonian and semi-Hamiltonian graphs

Hamiltonian graphs:

■■ contain a cycle (closed path) called a Hamiltonian cycle that involves every vertex of
the graph
■■ allow travellers to begin at any vertex, visit every vertex only once and return to the
starting vertex.
Semi-Hamiltonian graphs:

■■ contain an open path called a Hamiltonian path that involves every vertex of the graph
■■ allow travellers to begin at one vertex and to visit every other vertex only once but not
return to the starting vertex.
Hamiltonian and semi-Hamiltonian graphs must be connected.

Example 11 Solving a traveller problem

A map showing the towns of St Andrews, Kinglake, Yarra Glen, Toolangi and Healesville
is shown below.

a Draw a graph with a vertex representing each of the towns and edges representing the
direct road connections between the towns. Ignore any towns on the map not listed in
the question.
b Explain why this graph is Hamiltonian.
c Write down one:
i Hamiltonian path
ii Hamiltonian cycle that begins at Healesville

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 422 Chapter 10 ■ Graphs and networks 10F

Solution
a A road connection exists between: Kinglake
Toolangi
•• St Andrews and Kinglake
•• St Andrews and Yarra Glen
•• Kinglake and Yarra Glen St Andrews

•• Kinglake and Toolangi Yarra Glen

•• Yarra Glen and Toolangi Healesville
•• Yarra Glen and Healesville
•• Healesville and Toolangi
b Can a closed walk be found that visits It is possible to visit every town exactly once
every town? and return to the starting town, so the graph is
Hamiltonian.
c i T
 here are many solutions to this One Hamiltonian path is:
question, one of which is shown. St Andrews – Kinglake – Yarra Glen –
Toolangi – Healesville.
ii There are two solutions to this A Hamiltonian cycle that begins at Healesville is:
question, one of which is shown. Healesville – Yarra Glen – St Andrews –
Kinglake – Toolangi – Healesville.

Exercise 10F
Hamiltonian and semi-Hamiltonian graphs
Example 11 1 For each of the graphs below:

SF
i List one Hamiltonian path starting at vertex A.
ii List one Hamiltonian cycle starting at vertex E.
a A B C b B C

E A
D F D
F
G H I E

c B

C D
A
E

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 10F 10F Hamiltonian graphs and applications 423  

2 List a Hamiltonian path for this graph, starting at A B

vertex F and finishing at vertex G.
F G

E H

D C

3 The network diagram below shows E

CF
the location of a warehouse at D
vertex W.
This warehouse supplies equipment
F C
to six factories A, B, C, D, E and F.
W
a What is the degree of vertex W?
b A salesperson plans to leave
factory E, first visit the A B
warehouse, W, and then visit
every other factory. They will visit
each location only once and will
not return to factory E.
i Write down the mathematical term used to describe the planned route.
ii Write down an order in which the salesperson can visit the factories.
based on VCAA (2005)

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 424 Chapter 10 ■ Graphs and networks

10G Weighted graphs, networks and shortest

path problems
▶▶Weighted graphs
The edges of a graph represent the connections between the vertices of that graph.
Sometimes there is more information known about that connection. For example, if the edge
of a graph represents a road between two towns, the length of the road, or perhaps the time
it takes to travel that road, might be known.
Extra numerical information about the edge can be written next to the edge in a graph.
Graphs that have numerical information on each edge are called weighted graphs and
the numbers themselves are called the weights of the edges. Weighted graphs in which the
weights are physical quantities, such as distance, time or cost are called networks.
The total weight of a walk through a network is the sum of all the weights for the edges that
are travelled in that walk.

▶▶The travelling salesperson problem

The travelling salesperson problem is solved using a weighted graph.
i
Investigation 10G: The travelling salesperson problem
The solution to the travelling salesperson problem for a particular network is the
Hamiltonian cycle in the network that had the smallest total weight. While there are some
algorithms (mathematical procedures) that can be used to find this cycle, you will solve
travelling salesperson problems, and shortest path problems, using observation and trial-
and-error only.

▶▶Shortest path problems

Shortest path problems involve finding the shortest path from one vertex to another. This
path does not have to be Hamiltonian; that is, it does not need to visit every vertex in the
network. The length of the shortest path will be the sum of the weights for every edge that
the path covers.
Shortest path problems are easy to solve by inspection if the network has a small number
of vertices. Some edges may have very large weights compared to others and are probably
best avoided, while other edges may have very small weights compared to others. It may be
useful to try and incorporate these small weights into any shortest path.
Careful inspection of the network can help rule out any routes that are unlikely to contribute
to the shortest path overall.

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 10G Weighted graphs, networks and shortest path problems 425  

Example 12 Finding a shortest path

The graph below shows six towns represented by vertices and the roads between those
towns represented by edges.

Everage
20
Brookes 30
20
Armadale
Finton
30 20
20
60 50

Chilken 10 Dinkel

The weights on each of the edges show the travel times in minutes between each town.
Find the total time it takes to travel the shortest path from Armadale to Finton.
Solution
1 Consider smaller sections of the The shortest path from A to B is 20 (direct).
network, gradually moving through The shortest path from A to C is 40 (via B).
the network until the ending vertex The shortest path from A to D is 50 (via B).
is reached.
The shortest path from A to E is 40 (via B).
The shortest path from A to F is 70 (via B and E).
2 Write down the shortest path. The shortest path from A to F is A – B – E – F.
3 Add the weights to find the total Total time = 20 + 20 + 30
time. = 70 minutes
4 Write your answer. The shortest time to travel from Armadale to Finton is
70 minutes, via Brookes and Everage.

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 426 Chapter 10 ■ Graphs and networks 10G

Exercise 10G
Weighted graphs and networks
Example 12 1 The graph on the right shows towns A, B, C, D and E C 10

SF
15 D
represented by vertices. The edges represent road
8 9
connections between the towns and the weights on these A 6
edges are the average time, in minutes, it takes to travel B 12
along each road. 11
16
a Which two towns are 12 minutes apart by road? E
b How long will it take to drive from C to D via B?
c A motorist intends to drive from D to E via B. How
much time will they save if they travel directly from D to E?
d Find the shortest time it would take to start at A, finish at E and visit every town
exactly once.

Shortest path problems

2 Find the length of the shortest path from A to E in B F
6
the graph on the right. 4 D 7
8
A 3
E
5
3

3 The network on the right shows B 8 D

10
the distance, in kilometres, 9 6
H
5 8
along walkways that connect the 8 12 I
landmarks A, B, C, D, E, F, G, H A E
6 8
and I in a national park. 4 10 G
C 4
a What distance is travelled on the F
path A – B – E – H – I?
b What distance is travelled on the closed trail F – E – D – H – E – A – C – F?
c Find the shortest path from A to I.

4 In the network on the right, the 3

vertices represent small towns and 8 4 12
the edges represent roads. The 2 8
2
weights on the edges indicate the A 3
3 B
11 3 9
distance, in kilometres, between
8
towns. 15
14
Determine the length of the shortest
path between towns A and B.

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 Chapter 10 Review 427  

Review
Key ideas and chapter summary

Graph A graph is a diagram that shows the connections between objects,

AS represented by vertices, as edges between those vertices.

Vertex A vertex is a point in a graph that represents an object.

Edge An edge is a line in a graph that connects two vertices and

represents the connection between them.

Degree of a vertex The degree of a vertex is the number of edges that are attached
to that vertex. The degree of vertex A is written deg (A).

Loop A loop is an edge that connects a vertex of a graph to

itself. A loop contributes 2 to the degree of that vertex.

Multiple edge Sometimes a graph has two or more edges that connect
the same vertices. These are called multiple edges.

Isolated vertex An isolated vertex in one that is not connected to any

other vertex. Isolated vertices have degree zero.

Simple graph A simple graph does not have any loops and does not
have multiple edges.

Connected graph A connected graph is a graph that has no isolated vertices and
no separate parts.

Bridge A bridge is an edge in a connected graph that, if removed,

would leave the graph no longer connected.

Directed graph (digraph) A directed graph (digraph) is a graph with a direction

associated with the edges.

Subgraph A subgraph is a graph that is part of a larger graph and

has some of the same vertices and edges as that larger
graph. A subgraph does not have any extra vertices or
edges that do not appear in the larger graph.

Adjacency matrix An adjacency matrix is a square matrix that uses a zero or

an integer to record the number of edges connecting each
pair of vertices in the graph.

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 428 Chapter 10 ■ Graphs and networks
Review

Equivalent (isomorphic) Graphs that contain identical information (connections

graphs between vertices) to each other are called equivalent
graphs or isomorphic graphs.

Planar graph A planar graph is one that can be drawn so that no two
edges cross over.

Face A face is an area in a graph enclosed between edges. It

can only be reached by crossing an edge. One face on a
graph is always the area surrounding the graph.

Euler’s formula Euler’s formula applies to planar graphs. It states that: ’the
number of vertices plus the number of faces minus the
number of edges always equals 2’.
If v = the number of vertices, f = the number of faces and
e = the number of edges in a planar graph, then
v + f − e = 2.

Exploring a graph Movement through a graph from one vertex to another

along the edges of the graph is called exploring the graph.

Walk A walk is a route through a graph, from one vertex to

another, along the edges of the graph. An open walk will
start and end at different vertices. A closed walk will start
and end at the same ­vertex.

Trail A trail is a walk that has no repeated edges. It may contain

repeated vertices.

Path A path is a walk that has no repeated edges and no

repeated vertices.

Closed trail A closed trail is a trail (no repeated edges) that starts and
ends at the same vertex.

Cycle A cycle is also known as a closed path. It is a path (no

repeated edges and no repeated vertices) that starts and
ends at the same vertex.

Eulerian trail A closed trail (no repeated edges) that involves every edge
of the graph is called an Eulerian trail.

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Eulerian graph An Eulerian graph is a graph that contains an Eulerian trail.

Semi-Eulerian graph A semi-Eulerian graph is a graph that contains an open

trail that involves every edge of the graph.

Hamiltonian cycle A Hamiltonian cycle is a closed path (no repeat edges, no

repeat vertices) that visits every vertex of the graph. It will
start and end at the same vertex.

Hamiltonian graph A Hamiltonian graph is a graph that contains a

Hamiltonian cycle.

Hamiltonian path A Hamiltonian path is an open path (no repeat edges, no

repeat vertices) that visits every vertex of the graph.

Semi-Hamiltonian graph A semi-Hamiltonian graph is a graph that contains a

Hamiltonian path.

Weighted graph A weighted graph has numbers, called weights, associated

withs the edges of a graph. The weights often represent
physical quantities as additional information to the edge,
such as time, distance or cost.

Network A network is a weighted graph where the weights

represent physical quantities such as time, distance or cost.

The travelling salesperson The travelling salesperson problem involves finding the
problem Hamiltonian cycle in a graph (visits all vertices in a graph
once) that has the smallest total weight. It often refers to
minimising the total distance travelled through a graph to
return to the starting vertex.

The shortest path problem The shortest path problem involves finding the shortest path
from one vertex to another. The shortest path does not have to
visit every vertex.

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 430 Chapter 10 ■ Graphs and networks
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Skills check
Having completed this chapter, you should be able to:

■■ identify edges, vertices and loops in a graph

■■ determine the degree of a vertex in a graph
■■ define multiple edges, isolated vertices, connected graphs, bridges, simple graphs and
completed graphs
■■ define directed graphs
■■ identify and draw subgraphs
■■ write adjacency matrices for graphs
■■ draw a graph from an adjacency matrix
■■ define planar graphs and redraw graphs in planar form
■■ identify equivalent graphs
■■ use Euler’s formula
■■ define and identify walks, open walks, closed walks, trails and paths
■■ define and identify closed trails and cycles (closed paths)
■■ identify Eulerian trails
■■ identify Eulerian and semi-Eulerian graphs
■■ identify Hamiltonian cycles
■■ identify Hamiltonian and semi-Hamiltonian graphs
■■ define a weighted graph
■■ solve the travelling salesperson problem for a graph by finding the Hamiltonian cycle
with the smallest total weight
■■ solve the shortest path problem by finding the shortest path between two vertices.

Multiple-choice questions
1 For the graph shown below, which vertex has degree 5?
Q
S
P
U
T
R

A Q B T C S D R E U

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 Chapter 10 Review 431  

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2 Which one of the following is not a subgraph of C
the graph shown on the right? B
F

D G

A
E
A C B C C B
B B
D G
A
D D

A A

D F E C
B

D G
D

3 T
 he graph that has been drawn from the adjacency matrix A B  C D
shown on the right is: A 0 1 0 1
B 1 0 1 0
C 0 1 0 1
D 1 0 1 0

A A B B A C A B

E E B
C D D C

C
D

D A E A
B
D B
C
C
D

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 432 Chapter 10 ■ Graphs and networks
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4 The adjacency matrix that corresponds to the graph on the B

right is:
D
A
C

A A B C D B A B C D C A B C D
A 0 0 1 0 A 0 1 0 1 A 0 0 1 1
B 0 0 1 0 B 1 0 1 0 B 0 0 1 0
C 1 1 0 1 C 0 1 0 1 C 1 1 0 1
D 0 0 1 1 D 1 0 1 0 D
0 0 1 3
D A B C D E A B C D
A 1 0 0 1 A 1 0 0 1
B 0 0 1 0 B 0 0 1 0
C 0 1 0 1 C 0 1 0 1
D 1 0 1 1 D 1 0 1 1

5 A connected graph with 15 vertices divides the plane into 12 faces. How many edges
does this graph have?
A 15 B 23 C 24 D 25 E 27

6 A connected planar graph divides a plane into a number of faces. If the graph has eight
vertices and these are linked by 13 edges, then how many faces does it have?
A 5 B 6 C 7 D 8 E 10

Use the graph below to answer questions 7 and 8.

A

E
F B

7 The walk A – E – D – C – B – A is best described as a:

A cycle B Hamiltonian path C Eulerian trail
D closed trail E open walk

8 The walk E – A – F – C – D – E is best described as a:

A Eulerian trail B closed path C Hamiltonian cycle
D closed trail E open walk

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 Chapter 10 Review 433  

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9 For the graph shown on the right, which edge could be B
removed to result in a semi-Eulerian graph? C
A A–B A
B A–D E
C B–E F
D C–F D
E D–F

10 The length of the shortest path from F to B in the D

network shown on the right is: 8 7
3
A 17 E A 7
B 18 F 2 3 B
C
C 19 8
6 13
D 20
E 21

Short-answer questions
1 Consider the graph shown on the right. A

SF
B
a What is the degree of vertex C?
b How many odd-degree vertices does this graph have?
c Write down the vertices that have an even degree.
d Redraw the graph in planar form. C
D
2 Construct an adjacency matrix for the graph below.
A

3 Draw a directed graph using the adjacency matrix below.

A B C D
A 0 1 0 1
B 1 0 1 0
C 1 0 0 0
D 0 0 2 0

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 434 Chapter 10 ■ Graphs and networks
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4 The directed graph on the Rockhampton Rovers

right shows the results of a
round-robin darts tournament.
Each team is represented by a Mackay
vertex and the arrows point to Townsville Masters
the winner of that match. Terriors
a Which team(s) beat the
Rockhampton Rovers?
b How many teams did the
Mackay Masters beat? Bundaberg Braves Gladstone Gladiators
c Which team lost all of its
games?

5 Consider the graph on the right. B

a How many vertices does this graph have? C
b How many faces does this graph have?
c How many edges does this graph have? A
d Verify Euler’s formula for this graph. D

6 Consider the graph below. The vertices represent cities in a particular state. The
numbers on the arcs shows the time take, in hours, to drive between each city.
a In hours, which two cities are two hours driving A 6
time apart? C
b In hours, what is the shortest driving time 8 2 E
between E and B? 4
5 3
c In hours, what is the shortest driving time 8 D 7
between F and A? B
9 F

Extended-response questions
1 The network opposite shows the C2
CF

walking tracks in a small national park. 400 130 C3

120
The tracks, represented by arcs, connect C1 200
230 110
campsites to each other and to the park 160
office. The weights on the arcs show C8 140 C4
250
150 80
the distance, in metres, between each
location. park office C5
C7 350
a The graph shown is planar. Explain C6
600 280
what this means.
b Verify Euler’s formula for this network.

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 Chapter 10 Review 435  

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c A ranger at campsite C8 plans to visit campsites C1, C2, C3, C4 and C5 on her
way back to the park office. What is the shortest distance she will have to travel?
d Each day, the ranger on duty has to inspect each of the tracks to make sure that they
are all safe to walk on.
i Is it possible for her to do this starting and finishing at the park office, while
only walking along a path once? Explain your answer.
ii Identify one route that she could take.
e Another ranger wants to inspect each of the campsites but not pass through any
campsite more than once on the inspection route. He wants to start and finish his
inspection route at the park office.
i What is the mathematical name of the route he wants to take?
ii With the present layout of tracks, he cannot inspect all the tracks without
passing through at least one campsite twice. Suggest where an additional track
could be added to solve this problem.
iii With this new track, write down a route that he could follow.

2 The map on the right shows six campsites, B

6 9
A, B, C, D, E and F, which are joined by tracks.
The numbers on the edges give the lengths, in C
lake 4
kilometres, of those sections of track. A 5 3 D
5
1 4
5
2
F 3 E

a Complete the following questions related to B

the map of the campsites.
i Complete the graph opposite, which shows C
the shortest direct distances between A D
campsites. The campsites are represented
F
by vertices and the tracks are represented by
edges.
ii Fill in the missing entries for the adjacency E
matrix of the graph on the right.
A B C  D  E F
A 0 1 0 1 1 1
B 1 0 1 0 0 0
C 0 1 0 1 1 0
D 1 0 − − − −
E 1 0 − − − −
F 1 0 − − − −

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 436 Chapter 10 ■ Graphs and networks
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b A walker follows the route A – B – A – F – E – D – C – E – F – A.

i How far does this person walk if they take the shortest track between each
point?
ii Why is the route not a Hamiltonian cycle?
iii Write down a route that a walker could follow that is a Hamiltonian cycle.
iv Find the distance walked by following this Hamiltonian cycle.
c It is impossible to start at A and return to A by going along each track exactly once.
An extra track joining two campsites can be constructed so that this is possible.
Which two campsites need to be joined by a track to make this possible?

3 Four children each live in a different town. The A

CU
diagram below is a map of the roads that link
the four towns, A, B, C and D. B
a How many different trails are there from
town A to town D?
b How many different ways can a vehicle D
C
travel between town A and town B without
visiting any other town?
c Draw this map as a graph by representing towns as vertices and each different route
between two towns as an edge.
d Explain why a vehicle at A could not follow a trail through this graph.

4 A national park contains five locations connected by bushwalking tracks. The graph
below shows the park entrance, information centre, lookout, boathouse and camping
site represented by vertices and the bushwalking tracks represented by edges.

Lake
Information Boathouse
Centre

Campsite

Park Entrance Lookout

a If a bushwalker starts at the park entrance, write down two Hamiltonian cycles that
he can follow.
b Is an Eulerian trail possible for this graph? Explain your answer with mathematical
reasoning.

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 Chapter 10 Review 437  

Review
c The network below has the distances between locations (in kilometres) added to
each edge.

4 Lake
Information
Boathouse
Centre
2 3
3
Campsite
5
7
Park Entrance 6 Lookout

The bushwalker can walk at a speed of 4 km/hour.

i How long would it take the bushwalker to walk directly from the lookout to the
boathouse?
ii Determine the shortest time it would take the bushwalker to walk between the
park entrance and the camping site.

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 11
Chapter 11

Connector, assignment
and flow problems

UNIT 4 INVESTING AND NETWORKING

Topic 3 Networks and decision mathematics

▶▶ How do we define a tree or a spanning tree?

▶▶ How do we draw a tree from any graph?
▶▶ How do we find the minimum distance between two vertices?
▶▶ How do we draw and use a bipartite graph to solve allocation
problems?
▶▶ How do we find the optimal allocation of multiple groups of
objects?
▶▶ How do we define a flow?
▶▶ How do we calculate the maximum flow through a network?

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 11A Trees and connector problems 439  

11A Trees and connector problems

▶▶Trees
A tree is a connected graph that has no loops, no multiple edges, and no cycles. Recall that
a cycle starts and ends at the same vertex and has no repeated vertices, nor repeated edges.
Because a tree has no cycle, it will be impossible to find a walk in a tree that starts and ends
at the same vertex without repeating an edge.
The number of edges in a tree will always be one less than the number of vertices.
G
Every connected graph will contain at least one subgraph that H
I
is a tree.
Some of the trees in the graph on the right are shown below. D

In all three of the graphs below, a cycle does not exist. The E F
trees are all subgraphs of the original graph. The first two
B
trees involve some of the vertices of the original graph, but A
the third tree involves every vertex from the original graph. C

H      G      G
H H I

D D
E
E E
F
B
B B
A A
C A
C

Spanning trees
A spanning tree of a graph is a tree that includes every vertex of that graph. A connected
graph may have more than one spanning tree.
A spanning tree can also be found for a weighted graph. The total weight of the spanning
tree is the sum of all the weights in that spanning tree.
A spanning tree can be found by removing edges of the graph until there is one less edge
than the number of vertices in the graph, making sure that all vertices remain connected.
A guide to trees: Watch the video in the Interactive Textbook to see trees, spanning trees
and minimum spanning trees in action.

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 440 Chapter 11 ■ Connector, assignment and flow problems

Trees
A tree has no loops, multiple edges or cycles.
If a tree has n vertices, it will have n − 1 edges.
A spanning tree is a tree that connects all of the vertices of a graph.
The weight of a spanning tree for a weighted graph is the sum of the weights of the
edges in that tree.

Example 1 Finding the weight of a spanning tree

a Draw one spanning tree for the graph shown 3
on the right. 4
2 1
b Calculate the weight of the spanning tree. 3
6
4 2
5 7

2 5 2

Solution
a 1 C
 ount the number of vertices There are 9 vertices and 13 edges.
and edges in the graph.
2 Calculate the number of edges The spanning tree will have 9 − 1 = 8 edges.
in the spanning tree.
3 Calculate how many edges must Remove 13 − 8 = 5 edges.
be removed.
4 Choose edges to remove.
2 1 4
Make sure that no vertex is left
isolated. 3
4
Note: there are many other spanning trees
5
that are possible. This is just one example.
5 2

b Add the weights of the remaining 4

2 1
edges.
3
4
5
2
5

Weight = 5 + 2 + 1 + 4 + 5 + 2 + 3 + 4
= 26

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 11A Trees and connector problems 441  

Minimum spanning trees

For any graph, there may be more than one spanning tree possible. If the weight of every
spanning tree is found, there will always be a tree, or trees, that has a smaller total weight
than all the others. This tree is called the minimum spanning tree for that graph.
For small graphs, the minimum spanning tree can be found by inspection, but for larger
trees, an algorithm must be used. An algorithm is a series of instructions that can be used
to solve a particular problem. The algorithm used to find the minimum spanning tree for a
network is called Prim’s algorithm.

Prim’s algorithm
Prim’s algorithm is used to find the minimum spanning tree for a network.

■■ Choose a starting vertex:

•• the spanning tree will contain every vertex and so any vertex can be chosen as the
starting vertex.
■■ Inspect the edges that are connected to the starting vertex:
•• choose the edge that has the lowest weight
•• if there is more than one edge that has the lowest weight, it does not matter which
one you choose
•• the starting vertex, the edge chosen, and the vertex connected by this edge form
the beginning of the minimum spanning tree.
■■ Inspect the edges that are connected to the vertices chosen so far:
•• choose the one that has the lowest weight, but ignore any that would connect the
tree back to itself
•• add the chosen edge and the vertex connected by this edge to the minimum
spanning tree.
Repeat the process until all vertices have been added to the minimum spanning tree.

Example 2 Finding the minimum spanning tree

Apply Prim’s algorithm to find the minimum spanning C
tree for the graph shown on the right. Write down the 8
B
total weight of the minimum spanning tree. 2 6 3
A
5 D 5

7 6 E
6
2
F

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 442 Chapter 11 ■ Connector, assignment and flow problems

Solution
1 Choose any vertex to begin. We will start B
with vertex A. 2
2 The smallest weighted edge from vertex A is
A
to B with weight 2.
3 Look at vertices A and B. The smallest B
weighted edge from either vertex A or 2
5
vertex B is from A to D with weight 5. D
A
4 Look at vertices A, B and D. The smallest C
weighted edge from vertex A, B or D is from B
D to C with weight 3. 2 3

A D
5
5 Look at vertices A, B, D and C. The smallest C
weighted edge from vertex A, B, D or C is B
from C to E with weight 5. 2 3 5

A D
5
E
6 Look at vertices A, B, D, C and E. The C
smallest weighted edge from vertex
B
A, B, D, C or E is from E to F with weight 2.
2 3 5
All vertices have been included in the graph.
This is the minimum spanning tree. A 5 D
E
2
F
7 Add the weights to find the total weight of The total weight of the minimum spanning
the ­minimum spanning tree. tree is 2 + 5 + 3 + 5 + 2 = 17.

Kruskal’s algorithm This alternative method is covered in the Interactive Textbook.

▶▶Connector problems
A connector problem involves a situation where it is important to minimise the connections
between vertices for an overall minimum total weight. For example, if towns are to
be connected to a gas pipeline, then it would be important to minimise the cost of the
connections used.
A minimum spanning tree is used to solve connector problems. The minimum spanning tree
gives the edges required to keep all vertices connected in the graph for the smallest possible
total weight.
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 11A Trees and connector problems 443  

Example 3 Solving a connector problem

At a showgrounds, 11 locations require 70
access to water. These locations are 40 50
40
represented by vertices on the network 60 60 60
diagram shown. The dashed lines on
70 60
the network diagram represent possible 70 50
60 40 70
water pipe connections between adjacent
locations. The numbers on the dashed 50
lines show the minimum length of pipe, in
metres, required to connect these locations.
a On the diagram, show where these water pipes should be placed to minimise the total
amount of piping used.
b Calculate the total length, in metres, of pipe that is required.
©VCAA (Further Maths, 2, 2011)

Solution
a 1 The water pipes will be a 70
minimum length if they are 40 50
40
placed on the edges of the 60 60 60
minimum spanning tree for the
70 60
network. 70 50
A good starting point for Prim’s 60 40 70
algorithm is the vertex that is 50
connected by just one edge.
This vertex must be connected
to the minimum spanning tree
by this edge.
2 Follow Prim’s algorithm to find 70
the minimum spanning tree. 40 50
40
60 60 60
70 60
70 50
60 40 70
50

b Add the weights of the minimum The length of water pipe required is
spanning tree. Write your answer 60 + 60 + 40 + 60 + 40 + 50
in a sentence. + 50 + 60 + 40 + 50 = 510 meters

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 444 Chapter 11 ■ Connector, assignment and flow problems 11A

Exercise 11A
Trees and spanning trees

1 Complete the following for the different trees.

SF
a How many edges are there in a tree with 12 vertices?
b How many vertices are there in a tree with 8 edges?
c Draw two different trees that have 5 vertices.

2 Which of the following graphs are trees?

A B C

D E F

Example 1 3 For each of the following graphs, draw two different spanning trees.
a b c

4 A network is shown on the right. 5

CF

a How many edges must be removed in

order to leave a spanning tree? 4 2
5 3
b Remove some edges to form two
3 4
different trees.
c For each tree in part b, find the total
2 2 3 6
weight.

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 11A 11A Trees and connector problems 445  

Prim’s algorithm

Example 2 5 Apply Prim’s algorithm to determine a minimum spanning tree for each of the
following graphs and then write down the total weight.
a A 2 B 2 E b 24 C
B
3
6 2 2 F 16 16 16
3 17 E 17
5 A D
C 1 D 11
10 12 15

G 17 F

c B 18 C d D
10 100
H 70 140
E 19 E G
18 20 90 C 100 200
10 9 80 90
B F
A 18 D 90
120
A

Connector problems
13 Outlet B
Outlet A
Example 3 6 Water is to be piped from a water tank to 6
11
seven outlets on a property. The distances 12 6 Outlet C
(in metres) of the outlets from the tank and Tank 2
Outlet G 11
from each other are shown in the network Outlet F 10 8 5
7
to the right. Starting at the tank, determine
the minimum length of pipe needed to Outlet E 9 Outlet D
have water piped to all outlets in the
property.

7 Power is to be connected by cable from a A

power station to eight substations (A to H). 21 23
Power station 6
C B
The distances (in kilometres) of the 11 11
18 9 10
substations from the power station and 18
G H
from each other are shown in the network to F 31
12 8 15
the right. Determine the minimum length of 17
cable needed to provide all substations with
E 19 D
power.

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 446 Chapter 11 ■ Connector, assignment and flow problems

11B Assignment problems and the Hungarian algorithm

▶▶Assignment problems
Assignment problems involve matching two groups of objects to each other based on
particular needs or circumstances. For example, a school has particular subjects that need
teachers and the school also has teachers that can teach particular subjects. The school
would need to assign teachers to subjects to ensure that every class had a teacher. Another
example of an assignment problem is a factory that has a number of machines and machine
operators. The factory may want to assign an operator to a machine so that the total time it
takes a process to occur is minimised.

Bipartite graphs
Assignment problems can be represented graphically using a bipartite graph. In a bipartite
graph, there are two groups of vertices. The vertices from one group are connected to one or
more vertices in the other group by edges.
The bipartite graph below has two groups of vertices, one for the music teachers in a
music school and one for the instruments that are taught. Each teacher and instrument are
represented by a vertex in the relevant group.

Teacher Instrument
Adriana Piano

Bronwyn Guitar

Celia Violin

David Flute

The edge in the bipartite graph connects the teachers to the instruments that they can teach.
For example, Adriana can teach both Guitar and Flute because there is an edge connecting
Adrianna to each of these instruments.
The bipartite graph can help the school assign each teacher to an instrument. For example,
Bronwyn is the only teacher that can teach piano and so this assignment is necessary. Celia
can only teach Flute and so, even though Adriana can teach both Flute and Guitar, if she
teaches Flute then Celia will not be able to teach anything. So, Celia must teach Flute,
which in turn means Adriana must teach Guitar.

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 11B Assignment problems and the Hungarian algorithm 447  

Example 4 Solving an assignment problem with a bipartite graph

Adrian, Bev, Charlie, Dorian and Evelyn are presenters on a TV travel show. Each
presenter will be assigned a story to film about one country that they have visited before.
■■ Adrian has visited Senegal. ■■ Bev has visited Vietnam and Peru.
■■ Charlie has visited Ghana and Peru. ■■ Dorian has visited Senegal and Myanmar.
■■ Evelyn has visited Vietnam and Myanmar.
Construct a bipartite graph of the information above and use it to decide on the
assignment of each presenter to one country.

Solution
1 The two groups of items are: Presenters and Adrian Senegal
Countries. Draw a vertex for each presenter in one
column and each country in another. Bev Vietnam
2 Adrian has visited Senegal so she could be sent there
Charlie Peru
to film her story. Join the vertices for Angie and
Senegal with an edge. Dorian Ghana
3 Bev has visited Vietnam and Peru so join the vertex
for Bev to the vertices for Vietnam and Peru. Evelyn Myanmar
4 Join the other presenter vertices to country vertices
in a similar way.
5 Definite assignments are shown in red, impossible Adrian Senegal
assignments are shown with dotted lines in the
bipartite graph. Bev Vietnam
••
Adrian is only connected to Senegal and so must
Charlie Peru
visit this country. If Angie visits Senegal, Dorian
cannot. Dorian Ghana
••
If Dorian cannot visit Senegal, he must visit
Myanmar. Evelyn Myanmar
••
If Dorian visits Myanmar, then Evelyn cannot.
••
If Evelyn cannot visit Myanmar, she must visit
Vietnam.
••
If Evelyn must visit Vietnam, Bev cannot and so
she must visit Peru.
••
If Bev must visit Peru, then Charlie cannot.
Charlie must visit Ghana.
6 Write the assignments. Adrian will visit Senegal.
Bev will visit Peru.
Charlie will visit Ghana.
Dorian will visit Myanmar.
Evelyn will visit Vietnam.

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 448 Chapter 11 ■ Connector, assignment and flow problems

Complete bipartite graphs

The assignment problem of presenter to country in Example 4 would be greatly simplified
if every presenter could visit all of the countries. Every presenter vertex would be connected
to every country vertex and there would be many different assignments that were possible.
The bipartite graph for this situation would be a complete graph.
Rather than just assign presenters to countries
Presenter 1 Country 1
randomly, the producers could use information
about the preferences of the presenters, or Presenter 2 Country 2
perhaps the number of times that they have
Presenter 3 Country 3
been to each of the countries, to make the
assignment with priority. This information Presenter 4 Country 4
would be weights on the edges of an already
Presenter 5 Country 5
very complex graph. Rather than write these
weights on the graph, they can be recorded in
a table instead.

Cost matrix
The table of weights for a bipartite graph is called a cost matrix. Even though it is called a
cost matrix, the ‘cost’ does not have to be in terms of money. It could be the time taken to
complete a task or the distance that needs to be travelled.
As an example, a factory might need to assign each of four employees to one of four
machines.
The cost matrix on the right shows the time Employee A B C D
each employee takes to complete the task on Wendy 30 40 50 60
each machine. This assumes that each of the Xenofon 70 30 40 70
four employees can perform all of the tasks
Yolanda 60 50 60 30
equally as well as each other in terms of the
quality of work. Zelda 20 80 50 70

The cost matrix only shows that the time each person takes to do the task is different. How
best to assign the employees to a machine is determined by an algorithm.

▶▶The Hungarian algorithm

The Hungarian algorithm is used to determine the best assignment of employee to
machine so that the overall time taken to complete the tasks is minimised.

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 11B Assignment problems and the Hungarian algorithm 449  

Performing the Hungarian algorithm

Step 1: Subtract the lowest value in each row, from every value in that row.

■■30 has been subtracted from every value in Employee A B C D

the row for Wendy.
■■ 30 has been subtracted from every value in Wendy 0 10 20 30
the row for Xenofon. Xenofon 40 0 10 40
■■ 30 has been subtracted from every value in Yolanda 30 20 30 0
the row for Yolanda.
Zelda 0 60 30 50
■■ 20 has been subtracted from every value in
the row for Zelda.

Step 2: If the minimum number of lines required to cover all the zeroes in the table
is equal to the number of allocations to be made, jump to step 6. Otherwise, con-
tinue to step 3.

■■The zeroes can be covered with three lines. Employee A B C D

This is less than the number of allocations
Wendy 0 10 20 30
to be made (4).
■■ Continue to step 3. Xenofon 40 0 10 40
Yolanda 30 20 30 0
Zelda 0 60 30 50

Step 3: If a column does not contain a zero, subtract the lowest value in that column
from every value in that column.

■■Column C does not have a zero. Employee A B C D

■■10 has been subtracted from every value in Wendy 0 10 10 30
column C.
Xenofon 40 0 0 40
Yolanda 30 20 20 0
Zelda 0 60 20 50

Step 4: If the minimum number of lines required to cover all the zeroes in the
table is equal to the number of allocations to be made, jump to step 6. Otherwise,
­continue to step 5a.

■■The zeros can be covered with three lines. Employee A B C D

This is less than the number of allocations
Wendy 0 10 10 30
to be made (4).
■■ Continue to step 5a. Xenofon 40 0 0 40
Yolanda 30 20 20 0
Zelda 0 60 20 50

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 450 Chapter 11 ■ Connector, assignment and flow problems

Step 5a: Add the smallest uncovered value to any value that is covered by two lines.
Subtract the smallest uncovered value from all the uncovered values.

■■The smallest uncovered element is 10. Employee A B C D

■■10 has been added to Xenofon–A and Wendy 0 0 0 30
Xenofon– D because these values are
covered by two lines. Xenofon 50 0 0 50
■■ 10 has been subtracted from all the Yolanda 30 10 10 0
uncovered values.
Zelda 0 50 10 50

Step 5b: Repeat from step 4.

■■The zeroes can be covered with a Employee A B C D

minimum of four lines. This is the
Wendy 0 0 0 30
same as the number or allocations
to make. Xenofon 50 0 0 50
■■ Continue to step 6. Yolanda 30 10 10 0
Zelda 0 50 10 50

Step 6: Draw a directed bipartite graph with an edge for every zero value in
the table.
In the bipartite graph: Wendy A

■■Wendy will be connected to A, B and C

■■Xenofon will be connected to B and C Xenofon B
■■Yolanda will be connected to D
■■Zelda will be connected to A. Yolanda C

Zelda D

Step 7 : Make the allocation and calculate minimum cost.

■■Zelda must operate machine A (20 minutes).

■■Yolanda must operate machine D (30 minutes).
■■Wendy can operate either machine B (40 minutes) or C (50 minutes).
■■Xenofon can operate either machine C (40 minutes) or B (30 minutes).
Note: Because Wendy and Xenofon can operate either B or C, there are two possible allocations.
Both allocations will have the same minimum cost.

The minimum time taken to finish the work = 20 + 30 + 40 + 40 = 130 minutes, or

20 + 30 + 50 + 30 = 130 minutes.

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 11B 11B Assignment problems and the Hungarian algorithm 451  

The Hungarian algorithm

■■ A cost matrix is a table of weights for a bipartite graph.
■■ The Hungarian algorithm is used to determine an allocation for minimum overall cost.
■■ The Hungarian algorithm assumes that the cost in the cost matrix is the only decision
factor for allocation. For example, a cost matrix that shows the time that four people
take to complete four jobs assumes that the time taken is the only difference and that
the quality of the work for all people is the same.

Exercise 11B
Bipartite graphs
Example 4 1 Gloria, Minh, Carlos and Trevor are buying ice-cream. They have a choice of five

SF
flavours: chocolate, vanilla, peppermint, butterscotch and strawberry.
•• Gloria likes vanilla and butterscotch, but not the others.
•• Minh only likes strawberry.
•• Carlos likes chocolate, peppermint and butterscotch.
•• Trevor likes all flavours.
a Explain why a bipartite graph can be used to display this information.
b Draw a bipartite graph with the people on the left and flavours on the right.
c What is the degree of the vertex representing Trevor?
The ice-cream shop has no butterscotch ice-cream available. Gloria, Minh, Carlos and
Trevor will have only one ice-cream each and will all have a different flavour.
d Who must have the vanilla ice-cream?
e If Carlos chooses peppermint, write down the allocation of ice-cream flavour to
these four people.

2 Joni, Ian, Dylan and Joshua are teachers in a school. The school has a Maths class, an
English class, a Geography class and a Science class, each of which a teacher. Each
teacher can be allocated one class only.
Joni can teach English or Geography.
Ian can teach Maths or Science.
Dylan can teach English or Geography.
Joshua can teach Geography or Science.
a Draw a bipartite graph to show the teachers and the subject that they can teach.
b Explain why Joshua must take the science class.
c Write two different allocations of teachers to subjects.

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 452 Chapter 11 ■ Connector, assignment and flow problems 11B

3 The table below shows five people in the rows and five sports in the columns. A tick
(✓) in a table cell indicates that the person in that row can coach the sport in that
column. A cross (×) indicates that they cannot coach that sport.
Each sport in the table must be coached by only one of the people in the table.

Hockey Cricket Soccer Rugby Squash

Rob ✓ × ✓ × ×
Janet × ✓ ✓ ✓ ✓
Tara × ✓ × ✓ ×
Diana ✓ × × ✓ ×
Jason × × × ✓ ×

a Draw a bipartite graph to represent the information contained in the table above.
b Explain why Diana must coach hockey.
c Write the allocation of people to sports.

The Hungarian algorithm

Job
4 Three volunteer workers, Joe, Meg and Ali,
are available to help with three jobs. The time Student A B C
(in minutes) in which each worker is able to Joe 20 20 36
complete each task is given in the table opposite. Meg 16 20 44
Which allocation of workers to jobs will enable
Ali 26 26 44
the jobs to be completed in the minimum time?

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 11B 11B Assignment problems and the Hungarian algorithm 453  

5 A football association is scheduling

Team Home Away Neutral
football games to be played by three teams
(the Champs, the Stars and the Wests) on Champs 10 9 8
one day. On this day, one team must play Stars 7 4 5
at their Home ground, one will play Away Wests 8 7 6
and one will play at a Neutral ground. The
costs (in $’000s) for each team to play at each of the grounds are given in the table to
the right.
Determine a schedule that will minimise the total cost of playing the three games and
determine this cost.
Note: There are two different ways of scheduling the games to achieve the same minimum cost. Identify
both of these.

6 A company has four machine operators

CF
Machine
and four different machines that they can
operate. The table shows the hourly cost in Operator W X Y Z
dollars of running each machine with each A 38 35 26 54
operator. How should the operators be B 32 29 32 26
allocated to the machines in order to
C 44 26 23 35
minimise the totally hourly cost of
operating all machines? D 20 26 32 29

7 a A
 cost matrix is shown. Find the allocation(s)
A B C D
by the Hungarian algorithm that will give the
minimum cost. W 110 95 140 80
X 105 82 145 80
Y 125 78 140 75
Z 115 90 135 85

b Find the minimum cost for the given cost

A B C D
matrix and give a possible allocation.
W 2 4 3 5
X 3 5 3 4
Y 2 3 4 2
Z 2 4 2 3

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 454 Chapter 11 ■ Connector, assignment and flow problems 11B

8 A roadside vehicle assistance organisation has four service vehicles located in four
different places. The table below shows the distance (in kilometres) of each of these
service vehicles from four motorists in need of roadside assistance.

Motorist
Service vehicle Jess Mark Raj Karla
A 18 15 15 16
B 7 17 11 13
C 25 19 18 21
D 9 22 19 23

Determine a service vehicle assignment that will ensure that the total distance
travelled by the service vehicles is minimised. Determine this distance.
Note: There are two ways that the service vehicles can be assigned to minimise the total distance
travelled. Identify both of these.

9 A relay race comprises four individual track distances: 100 m, 400 m, 800 m and
1500 m. Four students will each run one of the track distances. The time (in seconds)
each student can run each distance is given in the table below.

Student 100 m 400 m 800 m 1500 m

Dimitri 11 62 144 379
John 13 60 146 359
Carol 12 61 149 369
Elizabeth 13 63 142 349

Use the Hungarian algorithm to assign each student to one distance so that the total
time taken to complete the race is minimised.

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 11C Flow networks 455  

11C Flow networks

▶▶Flow problems
Flow problems involve the transfer or flow of material from one point, called the source,
through a flow network to another point called the sink. Water flowing through a network
of pipes or traffic flowing along a network of roads are examples of flow situations. Flow
problems involve determining how much water or traffic in total can pass through the
network, based on restrictions such as the capacity of the individual pipes.

Maximum flow
Consider the flow situation of water flowing through pipes. The water starts at the source,
flows through the network and then ends up at the sink. The water will flow in one direction
only. If the pipes are all different sizes, then water will flow at different rates through
different parts of the network. Overall, this will affect the rate at which the water arrives at
the sink.
The diagram on the right shows two pipes 58 L/min
that are joined together. The small pipe has
a capacity of 25 litres per minute and this is 25 L/min
joined to a larger pipe with capacity 58 litres
per minute. Water flows through from the
source, into the small pipe, through the large
pipe and out to the sink.
Even though the large pipe has a capacity of 58 litres per minute, the small pipe restricts the
flow of water into the large pipe to 25 litres per minute. The flow through the large pipe will
never be more than 25 litres per minute.
If the connection is reversed, water will 58 L/min
be able to enter the large pipe at the rate 25 L/min
of 58 litres per minute, but there will
be a ‘bottleneck’ of flow at the junction
between the large and small pipe. The
large pipe can deliver 58 litres of water every minute to the small pipe, but the small pipe
can only allow 25 litres per minute to pass.
In both of the situations above, the flow through the entire pipe system (both pipes from
source to sink) is restricted to a maximum flow of 25 litres per minute. This is the capacity
of the smallest pipe in the connection.
If we connect more pipes together, one
after the other, we can calculate the
overall capacity of maximum flow of the
pipe system by looking for the smallest
capacity pipe in that system.

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 456 Chapter 11 ■ Connector, assignment and flow problems

Maximum flow
If pipes of different capacities are connected one after the other, the maximum flow
through the pipes is equal to the minimum capacity of the individual pipes.

Example 5 Calculating the maximum flow

In the flow network shown on the right,
the vertices A, B, C, D and E represent B 600 C
towns. The edges of the graph represent
300 800
roads and the weights of those edges
are the maximum number of cars A E
that can travel on the road each hour. 500 D 150
The roads allow only one-way travel,
as indicated by the arrow.
a Find the maximum traffic flow from A to E through town C.
b Find the maximum traffic flow from A to E overall.
c A new road is being built to allow traffic from town D to town C. This road can carry
500 cars per hour.
i Add this road to the flow network.
ii Find the maximum traffic flow from A to E overall after this road is built.

Solution
a Look at the subgraph that includes B 600 C
town C.
300 800
The smallest capacity of the
individual roads is 300 cars per hour. A E
(source) (sink)
This will be the maximum flow
through town C.
The maximum flow from A to E through town C
is equal to the smallest capacity road along that
route. The maximum flow is 300 cars per hour.
b Look at the two subgraphs from A E
(source) 500 D 150 (sink)
A to E.
The maximum flow through C The maximum flow from A to E overall is:
will be 300 cars per hour. 300 + 150 = 450 cars per hour
The maximum flow through
D will be 150 cars per hour
(minimum capacity).
Add the maximum flow through C
to the maximum flow through D.

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 11C Flow networks 457  

c i  A
 dd the edge from D to C B 600 C
representing the new road to the
300 500 800
diagram.

A 500 D 150 E
ii  Determine the maximum flow. The maximum flow through A − B − C − E is
300. But C − E has capacity 800. If another 500
cars per hour come through D − C, they will be
able to travel from C − D.
The new maximum flow is now 800 cars
per hour.

▶▶Cuts
For flow networks that contain many vertices and edges, it can be difficult to determine the
maximum flow by inspection. We can simplify the search for maximum flow by searching
for cuts with the network. B
A cut divides the flow network into two parts,
1000
completely separating the source from the 700
sink. It is helpful to think of cuts as imaginary
blocks in the flow that do not allow any flow C 400
S A
across them. In the diagram on the right, the 1500
dotted line is a cut. It completely blocks the
flow from the source (S) to the sink (A). 600
1200 600
The second graph shown on the right contains
a dotted line that is not a cut. It blocks some of M
the flow through the network but there is still a
flow pathway from the source to the sink across the
top of the network.
source sink
A cut must completely block the flow from the
source to the sink.

Cut capacity
The cut capacity for any cut is the sum of all the weights of the edges that the cut passes
through. Only flow from the source side to the sink side is considered in the calculation of
cut capacity. Any flow from the sink side across the cut to the source side is ignored.

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 458 Chapter 11 ■ Connector, assignment and flow problems

Cuts and cut capacity

A cut is an imaginary line across a flow network that completely blocks all flow from the
source to the sink.
The cut capacity of a cut is the sum of the capacities for the edges of the flow network
that are blocked by that cut. Only edges that flow from the source side of the cut to the
sink side of the cut are considered.

Example 6 Calculating cut capacity

Calculate the capacity of each of the four cuts 15 B 14 C
10
shown in the flow network on the right. S 6 15 T
12
The cuts are labelled C1, C2, C3 and C4. 20 15
F 20 D
The source is vertex S and the sink is vertex T. C1 C2 C3 C4

Solution
1 All edges in C1 are counted as they all The capacity of C1 = 15 + 20 = 35
flow from S to T across the cut.
2 The edge from F to B in C2 is not The capacity of C2 = 14 + 20 = 34
counted. F is on the sink side of the cut
and the flow crosses the cut back to the
source side.
3 All edges in C3 are counted as they all The capacity of C3 = 14 + 15 + 20 = 49
flow from S to T across the cut.
4 The edge from D to C in C4 is not The capacity of C4 = 20 + 10 = 30
counted. D is on the sink side of the cut
and the flow crosses the cut back to the
source side.

▶▶Maximum flow and cut capacity

The capacity of a cut is important to determine the maximum flow through any flow
network. Look for the smallest, or minimum, cut capacity that exists in the graph. This
will be the same as the maximum flow that is possible through that graph.

Maximum flow
The maximum flow that is possible through a flow network is the same as the minimum
cut capacity possible for that network.

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  11C Flow networks 459  

Example 7 Calculating maximum flow

A
Calculate the maximum flow from S to T for the
8 3
flow network shown on the right. 5
B
S T
3 5
11 1
C

Solution
1 Mark in all possible cuts on the A
network. 8 3
5
S B
5 T
3
1
C 1 C 2 11 C C6
C3 C4 C5 C7

2 Calculate the capacity of all the cuts. The capacity of C1 = 8 + 11 = 19

The capacity of C2 = 3 + 11 = 14
The capacity of C3 = 3 + 5 + 11 = 19
The capacity of C4 = 8 + 3 + 1 = 12
The capacity of C5 = 3 + 3 + 1 = 7
The capacity of C6 = 8 + 5 + 1 = 14
The capacity of C7 = 3 + 5 + 1 = 9
3 Identify the minimum cut capacity The minimum cut capacity is 7 so the
and write your answer. maximum flow from S to T is 7.

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 460 Chapter 11 ■ Connector, assignment and flow problems 11C

Exercise 11C
Cuts and cut capacity
C3 C2

SF
Example 6 1 Find the capacity of each of the cuts in the C1
flow network on the right. The source is B 8 C
6 3
vertex S and the sink is vertex T.
3 5 T
S
8 10 3
F 4 E

2 Find the capacity of each of the cuts C1 C2 C3

in the flow network on the right. 4
4 4 5
The source is vertex S and the sink is 3
3 7 T
vertex T. S 8
8 2 3
4

Calculating maximum flow

Example 7 3 Find the maximum flow for each of the following flow networks. The source is vertex
S and the sink is vertex T.
a A 3 C 5 b A 3 C 7
4 6
6 T S 2 T
S 7
6 4 8 7
B B 6 D

c A 3 C d A 4 C 8
5 10
T S T
5 4 7 12
4 8
6 9 6
5 15
S 5 B 3 D B 10 D

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 11C 11C Flow networks 461  

Applications of maximum flow

Example 5 4 A train has the stages of its journey represented by the edges on the following directed

CF
network. The number of available seats for each stage is indicated beside the
corresponding edge, a shown on the diagram on below.

cut B cut C
cut D
0
cut A 4
3 3 9
7 4 7 Bowen
Arlie 1 8

4 7 4 cut E
8 1
4

The five cuts, A, B, C, D and E, shown on the network are attempts to find the
maximum number of available seats that can be booked for a journey from Arlie to
Bowen.
a Write down the capacity of cut A, cut B, cut C, cut D and cut E.
b Explain why cut E is not a valid cut when trying to find the minimum cut between
Arlie and Bowen.
c Find the maximum number of available seats for a train journey from Arlie to
Bowen.

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 462 Chapter 11 ■ Connector, assignment and flow problems
Review

Key ideas and chapter summary

Tree A tree is a graph that has no loops, multiple edges nor cycles.
AS If a tree has n vertices, then it will have n–1 edges.

Spanning tree A spanning tree for any graph is a tree that connects all
vertices of that graph.

Minimum spanning tree The minimum spanning tree for a graph is the spanning tree
that has the smallest possible total weight for that graph.

Prim’s algorithm Prim’s algorithm is an algorithm that is used to determine

the minimum spanning tree for a graph.

Connector problems A connector problem is a problem where it is important to

minimise the total weight of connections between objects or
locations. The weights in connector problems can be length,
time, cost or other physical quantity.
Connector problems are solved by finding the minimum
spanning tree for the graph that represents the problem.

Assignment problems Assignment problems involve matching the objects in one

group to objects in another so that the overall cost in terms of
time, money or other quantity is minimised.
Assignment problems are solved with bipartite graphs and/or
the Hungarian algorithm.

Bipartite graph A bipartite graph is a graph where the vertices exist in sepa-
rate groups. The edges of a bipartite graph connect vertices in
one group with vertices in the other.

Complete bipartite graph In a complete bipartite graph, every vertex in one group of
the bipartite graph is connected by an edge to every vertex in
the other group.

Cost matrix A cost matrix is a table of weights for a complete bipartite

graph. It contains the cost, in terms of time, money or other
quantity, of assigning objects from one group to objects in
another. An example of a cost matrix is a table of the time it
will take people (one group) to complete tasks (another group).

Hungarian algorithm The Hungarian algorithm is an algorithm that is used to

determine the best allocation to minimise the total cost.

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 Chapter 11 Review 463  

Review
Flow Flow is the transfer of material, such as water, gas or traffic,
through a directed network.

Flow network A flow network occurs where the directed edges of the graph
represent the flow of material from one vertex to another. The
weight of an edge of a flow network is called the capacity of
that edge.

Source The source is the origin of material that flows through a

network.

Sink The sink is the final destination of material that flows

through a network.

Flow problems A flow problem is a problem that involves maximising the

amount of material that flows through a network.
Flow problems can be solved by finding the minimum cut for
the network.

Cut A cut is an imaginary line dividing a directed graph into two

parts, one containing the source and the other containing the
sink. It can be imagined that the cut blocks the flow through
any edge it crosses.

Cut capacity The cut capacity of a cut is the sum of all the weights on the
edges it cuts. Only edges that flow from the source side of the
cut to the sink side of the cut are considered.

Maximum flow The maximum flow possible through a directed graph is the
same as the smallest cut capacity of the cuts that are possible
in that graph.

Skills check
Having completed this chapter, you should be able to:

■■ define and describe a tree

■■ draw a tree from any graph
■■ identify a spanning tree for any graph
■■ calculate the weight of a spanning tree
■■ identify the minimum spanning tree using Prim’s Algorithm

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 464 Chapter 11 ■ Connector, assignment and flow problems

■■ solve connector problems using Prim’s Algorithm

Review

■■ define and describe bipartite graphs

■■ solve simple assignment problems using bipartite graphs
■■ solve assignment problems using the Hungarian Algorithm
■■ define and describe flow
■■ calculate the maximum flow through a flow network by observation
■■ identify cuts and calculate cut capacities
■■ determine the maximum flow through a flow network by finding the capacity of the
minimum cut
■■ solve flow problems by finding minimum cut capacities.

Multiple-choice questions
1 Which one of the following graphs is a tree?
A B C D E

2 A graph has 6 vertices and 12 edges. A spanning tree for this graph will have:
A 5 vertices and 12 edges
B 5 vertices and 5 edges
C 6 vertices and 5 edges
D 6 vertices and 6 edges
E 6 vertices and 12 edges

3 For the graph shown here, the minimum spanning tree 7

8
has length:
A 30 B 31 C 33 4
5 10
D 34 E 36
4 6
9
4 There are four different human blood types: O, A, B and 2
AB. Blood can be donated from one human to another
using the following rules:

•• Type O can donate blood to any type.

•• Type AB can receive blood from any type
•• Each type can donate blood to its own type.
•• Each type can receive blood from its own type.

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 Chapter 11 Review 465  

Review
Which one of the following bipartite graphs correctly represents this information?
A O A B AB B O A B AB
donor donor

recipient recipient
O A B AB O A B AB

C O A B AB D O A B AB
donor donor

recipient recipient
O A B AB O A B AB

E O A B AB
donor

recipient
O A B AB

5 A group of five students represent their Travis basketball

school in five different sports. The
information is displayed in a bipartite graph. Fulvia swimming
From this graph we can conclude that: Miriam athletics
A Travis and Miriam played all the sports
between them. Kieren volleyball
B In total, Miriam and Fulvia played fewer
Andrew tennis
sports than Andrew and Travis.
C Kieren and Miriam each played the same
number of sports.
D In total, Kieren and Travis played fewer different sports than Miriam and Fulvia.
E Andrew played fewer sports than any of the others.

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 466 Chapter 11 ■ Connector, assignment and flow problems
Review

6 Five people are to be each allocated

Name A B C D E
one of five tasks (A, B, C, D, E).
Francis 12 15 99 10 14
The table shows the time, in hours,
that each person takes to complete David 10 9 10 7 12
the tasks. The total time to complete Herman 99 10 11 6 12
all the tasks is to be minimised. If Indira 8 8 12 9 99
no person can help another, Francis Natalie 8 99 9 8 11
should be allocated task:
A A B B C C D D E E

7 For the flow network shown on the right, 7

9
the capacity of the cut is: 2 3 cut
source 5 4
A 3 B 6 C 9
3 sink
D 10 E 14 4
5 6

8 The maximum flow, from source to sink, 8

4
in the flow network shown to the right is: 7
A 10 B 11 C 12 6
D 13 E 14 6
6
5
7
9 In the flow network to
the right, the weight of e
each edge is non-zero. 4 2 9
d
6
The capacity of the cut
source c sink
shown is: 8 b
A a+b+c+d+e 3 11 a
B a+c+d+e 7 cut
C a+b+c+e
10
D a+b+c−d+e
E a−b+c−d+e 5
14 4
10 The flow network to the right shows 4
the capacity of data flow along cables 7
Q
in Megabits per second. What is the P
maximum flow of data, in Megabits per 3 5
10 12
second, from server P to server Q?
A 20 B 22 C 23
D 24 E 30 8

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 Chapter 11 Review 467  

Review
Short-answer questions

1 Consider the graph shown on the right. A

SF
a How many edges must be removed in order to C
leave a spanning tree? B
b Two of the edges in this graph must be in every F
spanning tree. Between which vertices are these edges?
D E
c Remove some edges to form two different spanning
trees for this graph. G
2 Determine the minimum spanning tree for the 8
network shown on the right. 8
7
4
3 6
5
9
4

3 The bipartite graph on the right shows the Gardener Plant

gardeners in a botanical garden and the plant
Audrey Aloes
types that they have experience caring for.
a How many gardeners have experience
Brian Cactus
caring for Aloes?
b Which gardener is the only gardener who Cameron Natives
has experience caring for natives?
c The head gardener will assign Audrey, Daphne Grasses
Brian, Cameron and Daphne to one plant
type each. How must the plant types be
allocated to gardeners?

4 Isla has four employees,

Word Editing Printing Mailing
David, Robyn, Linda and
processing
Anthony. She needs to
assign each of these David 5 1 0 2
people to one of four Robyn 4 0 2 0
tasks: Word processing, Linda 2 0 3 2
Editing, Printing, Mailing.
Anthony 0 3 5 1
Isla has applied the
Hungarian algorithm to
determine how these tasks should be allocated so that the least overall time is spent
completing all the tasks. The result of this is shown in the table above.
a Construct a bipartite graph from this table.
b Determine the allocation of tasks that Isla should make.

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 468 Chapter 11 ■ Connector, assignment and flow problems
Review

5 Steve is a supervisor in a furniture factory. An order for chairs needs to be filled. The
table below shows the time, in hours, it would take each of four employees (Julia,
Mario, Sylvana, George) to perform each of four tasks (cutting the pieces, assembling
the chairs, preparing the chairs for painting, painting the chairs) required to complete
the chairs for this order.

Cutting Assembling Preparing Painting

Julia 8 4 3 4
Mario 6 6 7 5
Sylvana 8 6 4 6
George 5 8 5 6

a Which employee would take the shortest time to paint the chairs?
b Which employee would take the longest time to prepare the chairs for painting?
c Apply the Hungarian algorithm to determine the allocation of employee to task so
that the overall minimum time is taken to fill the order.

6 In the flow network opposite, the values cut

3
on the edges give the maximum flow 8
10 7
possible between each pair of vertices. 6 9 2 2
source 8
The arrows show the direction of flow 5 sink
11 5 9
in the network. Also shown is 13
15
a cut that separates the source from 14
the sink.
a Determine the capacity of the cut shown.
b Determine the maximum flow through this network.

Extended-response questions

1 In the network opposite, the vertices represent 300

CF

water tanks on a large property and the edges 70 40 140

80 70
represent pipes used to move water between 90 60 80
40
the tanks. The numbers on each edge indicate 40 40
80 50
the lengths of pipes (in m) connecting different 60 110
120
tanks. 150
90
Determine the shortest length of pipe needed
to connect all water storages.

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 Chapter 11 Review 469  

Review
2 Bernard, Georgia, Chris and Arthur are student pilots. Their flying instructor, Terry,
has four lesson appointments available on a particular Saturday (9 a.m., 10 a.m.,
1 p.m. and 3 p.m.).
••
Bernard can only fly at 10 a.m.
••
Georgia can fly at any time before midday.
••
Chris can fly at 9 a.m. and then any time after 11 a.m.
••
Arthur can fly any time after 2 p.m.
a Draw a bipartite graph with the student pilots on the left and the times on the right.
b Which student pilot will Terry be teaching at 1 p.m.?
c Write down the appointment times for each of the four student pilots.

3 Ann, Bianca, Con and David are four examination supervisors. There are four
examinations venues: B, C, D and E. Each examination venue requires one
examination supervisor.
The table shows the times (in minutes)
Supervisor B C D E
that the examination supervisors would
take to travel from their home to each Ann 25 30 15 35
examination venue. Bianca 22 34 20 45
Determine the allocation of examination Con 32 20 33 35
supervisor to examination venue that will
David 40 30 28 26
minimise the overall travel time for the
supervisors.

4 The flow network on the right shows 100

the maximum rate of water flow 200 200
500
(in litres per minute) through a 100 700
sink
system of water pipes. The water source 400
flows from the source to the sink. 100 100
400
a Determine the maximum amount
600
of water that can flow from the
source to the sink through this
network of pipes.
b How many litres of water will flow into the sink over the 2 hours?
c A tank with capacity 2700 L is placed at the sink. How long will it take this tank to fill?

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 470 Chapter 11 ■ Connector, assignment and flow problems
Review

5 The diagram below shows the buildings of a new university. The lines on the diagram

CU
show the location of the pathways between the buildings.
20 m 20 m
A Office

10 m 25 m
30 m 10 m

30 m 20 m 10 m
B
10 m 10 m

25 m 15 m

C 20 m 10 m D

a i How many different ways can a student walk directly from building A to building B?
ii Represent this diagram as a weighted graph in planar form.
iii Which buildings are immediately adjacent to building C?
Some of the pathways will be covered to protect students from the rain as they
move between buildings. The covering structure will cost $240 per metre to make
and install.
b The shortest direct pathway between each building and its adjacent buildings will
be covered.
i Modify your planar weighted graph from question aii above to show only the
shortest direct pathway between adjacent buildings.
ii How much will the covered walkways on these pathways cost to build?
c It has been decided that covering all of these walkways is too expensive. Only the
minimum number of pathways that are necessary to allow students to walk from
one building to any other while remaining under cover will be built.
i Draw the graph that shows the pathways that should be covered so that the
overall cost of making and installing the covering structure is a minimum.
ii Calculate the cost of the covering structure in part i.

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 Chapter 11 Review 471  

Review
d In emergency situations, some of the doors in building B are locked and students
are directed to evacuate the university via other pathways. The diagram below
shows the locations of these evacuation pathways.
q q
A Office

r
r q r
B
q q
p
q
C D
r r
The pathways and doors allow different rates of students to flow along per minute.
On the diagram:
■■ p = flow rate of 80 students per minute
■■ q = flow rate of 120 students per minute
■■ r = flow rate of 150 students per minute
i If there are 675 students in building D when the alarm bell rings, what is the
minimum time it could take all students to leave this building? Assume there
are no students in the other buildings.
ii Evening school is held in building C. On a particular evening there were 840
students in building C. Assume that there were no other students in any of
the other buildings. How long would it take to evacuate all of these students
through the office building?

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 12
Chapter 12

Project planning and

scheduling

UNIT 4 INVESTING AND NETWORKING

Topic 3 Networks and decision mathematics

▶▶ How do we plan for a project?

▶▶ How do we identify predecessors of an activity?
▶▶ How do we draw an activity network and use it to plan for a
project?
▶▶ How do we account for float times in our project?
▶▶ How do we find the earliest starting time and latest finishing
time for an activity in a project?

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 12A Project planning – precedence tables and activity networks 473  

12A Project planning – precedence tables and activity

networks
▶▶Project planning
Building a house, manufacturing a product, and organising a wedding are all examples of
a project, that is a task that involves a number of individual steps, or activities, that must
be completed. The individual activities often rely upon each other and some cannot be
performed until others are completed.
For example, in the organisation of a wedding, invitations would be sent out to guests, but
a plan for seating people at the tables during the reception cannot be completed until the
invitations have been accepted. When building a house, the plastering of the walls cannot
begin until the house has been sealed from the weather.
Project planning involves the analysis of the requirements of each of the activities of a
project to determine the order in which they must be completed.

Activity networks
Projects are represented using a directed graph called an activity network. Activity
networks have a vertex labelled start and another labelled finish. Each activity within the
project is represented by an edge and so in activity networks it is the edges that must be
labelled, not the vertices. The edges are arranged to display the order in which activities
must be completed. Activity networks do not have multiple edges.
This activity network shown below represents the project of making a sponge cake. There
is an edge labelled for each of the steps of the recipe. The vertices have not been labelled,
except for start and finish.
Cream butter and sugar
Mix in flour
Finish
Beat eggs Pour into tins
Line tins
Bake
Start
Heat oven
The edges for activities ‘Cream butter and sugar’ and ‘Beat eggs’ both end at the vertex
where the activity ‘Mix in flour’ begins. This shows that the butter and sugar must be
creamed and the eggs beaten before the flour can be mixed in. The activity ‘Mix in flour’
cannot begin until the other two activities are completed. Similarly, the activity ‘Pour into
tins’ cannot begin until the activity ‘Line tins’ is also completed. Finally, the activity ‘Bake’
cannot begin until all the other activities, including ‘Heat oven’, are completed.
Activity networks show the precedence that activities have over each other. The activity
‘Mix in flour’ must be completed before the activity ‘Pour into tins’ can begin and so ‘Mix
in flour’ is called an immediate predecessor of activity ‘Pour into tins’.

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 474 Chapter 12 ■ Project planning and scheduling

Example 1 Interpreting activity networks

The activity network for a project is shown below.
E
G
B
C H
A I
Start Finish

D F

a How many activities are involved in this project?

b Which activity is an immediate predecessor of activity F?
c Activity B is an immediate predecessor of which activity?
d How many immediate predecessors does activity H have?

Solution
a Count the number of edges in the network. This project has 9 activities.
b An immediate predecessor of activity F ends Activity D is an immediate predecessor of
at the vertex at which activity F begins. activity F.
c Any activity that begins at the same vertex Activity B is an immediate predecessor of
that activity B ends on has activity B as an activity E.
immediate predecessor.
d Count the number of activities that end at Activity H has two immediate predecessors,
the vertex at which activity H begins. G and C.

Precedence tables Immediate

The immediate predecessors for all activities in a Activity predecessors
project can be recorded in a precedence table. The
A −
precedence table on the right is for a project that has
seven activities, A, B, C, D, E, F and G. B −
C A
Activity C has only one immediate predecessor,
activity A. D B
E B
Activity B is an immediate predecessor of both
activity D and activity E. F C, D

Activity F has two immediate predecessors, activities G E, F

C and D.
Activities A and B have no immediate predecessors, as indicated by ‘–’. This means that
they can begin at the ‘start’ vertex; that is, at the very start of the whole project.

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 12A Project planning – precedence tables and activity networks 475  

Activity networks and precedence tables

A project is made up of individual activities.
An activity network has edges that represent the activities of a project. The vertices of an
activity network are not labelled, except for the start and finish vertices.
Activity networks do not have multiple edges.
When activity M must be completed before activity N begins, activity M is called an
immediate predecessor of activity N.
A precedence table records all of the immediate predecessors for each activity of a
project.

Example 2 Drawing an activity network from a precedence table

Draw an activity network from the precedence table shown below.

Activity Immediate predecessors

A −
B A
C A
D A
E B
F C
G D
H E, F, G

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 476 Chapter 12 ■ Project planning and scheduling

Solution
The activity network can be drawn in any order, beginning with any activity.
In this solution, the activity network will be drawn from the finishing vertex back to the
starting vertex.
H is not an immediate predecessor for Finish
any other activity so it will lead to the H
finish of the project.
H has immediate predecessors E, F and E
G and so these three activities will lead Finish
F
into activity H. H
G

Activity D is an immediate predecessor E

of activity G and has immediate Start F
Finish
predecessor activity A. There will be a A H
G
path through activity A, activity D and
then activity G. D
Activity C is an immediate predecessor E
of activity F and has immediate Start F
Finish
predecessor activity A. There will be a A H
C G
path through activity A, activity C and
then activity F. D
Activity B is an immediate predecessor E
of activity E and has immediate Start F
B Finish
predecessor activity A. There will be a A H
C G
path through activity A, activity B and
then activity E. D
Activity A has no immediate E
predecessors, so it is the start of the Start F
B Finish
project. A H
C G

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 12A Project planning – precedence tables and activity networks 477  

▶▶Dummy activities
Although activity networks do not have multiple
Activity Immediate predecessors
edges between vertices, there are instances where
the conditions of the project imply that multiple A −
edges are required. A dummy activity must B −
be used in these circumstances. This is usually C −
indicated by activities that share some immediate
D A, B
predecessors, but not all of them.
E B, C
In this very simple precedence table, activity
D and activity E share the immediate predecessor activity B, but they both have an
immediate predecessor activity that the other does not.
This overlap of predecessors presents some difficulty when constructing the activity
network, but this difficulty is easily overcome.
Activity D and activity E are not immediate
predecessors for any other activity, so they will A D
B
lead directly to the finish vertex of the project. Start Finish
Activites A, B and C have no immediate E
predecessors, so they will follow directly from C
the start vertex of the project.
The start and finish of the activity network are shown in the diagram above. We need to use
the precedence information for activity D and activity E to join these two parts together.
Activity D needs to follow directly from activity A and activity B, but we can only draw
one edge for activity D. Activity E needs to follow directly from both activity B and activity
C, but again we only have one edge for activity E, not two.
The solution is to draw the diagram with activity
D starting after one of its immediate predecessors, A D
B Dummy
and using a dummy activity for the other. The Start Finish
dummy activities are represented by dotted edges
E
and are, in effect, imaginary. They are not real C
activities, but they allow all of the predecessors
from the table to be correctly represented.
The dummy activity for D allows activity D to
A D
directly follow both activity A and B. Dummy
B
Start Finish
A dummy activity is also needed for activity E Dummy
because it, too, has to start after two different E
C
activities, activity B and C.

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 478 Chapter 12 ■ Project planning and scheduling

Dummy activities
A dummy activity is required if two activities share some, but not all, of their immediate
predecessors. This can avoid the activity network having multiple edges between two vertices.
A dummy activity will be required from the end of each shared immediate predecessor to
the start of the activity that has additional immediate predecessors.
Dummy activities are represented in the activity network using dotted lines.

Example 3 Constructing an activity network that requires a dummy activity

Draw an activity network from the Activity Immediate predecessors
precedence table shown on the right.
A −
B −
C A
D B
E C, D
F C
G E, F

Solution
■■ A and B will lead from the start C
vertex. A F
■■ G will lead to the end vertex. Start Dummy
G
Finish
■■ A dummy will be required from B E
the end of activity C (shared
immediate predecessor) to the D
start of activity E (the activity
with an additional immediate
predecessor.

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 12A Project planning – precedence tables and activity networks 479  

Example 4 Creating a precedence table from an activity network involving

dummy activities

Write a precedence table for the activity network shown below.

D
B G
A Dummy I
Start F
Dummy Finish
C J
E H

Solution
1 Create a table with a row for each activity.
Activity Immediate
2 Look at the start of an activity. In the
immediate predecessor column, write down
predecessors
all of the activities that lead directly to this A –
activity. B A
3 Activity C is a predecessor of activity E and
C A
the dummy shows that it is also a predecessor
of activities F and G. D B
4 Activity G is a predecessor of activity I and E C
the dummy shows that it is also a predecessor
F D, C
of activity J.
Note: The dummy activity is not included in the
G D, C
precedence table. The dummy is there only to ensure H E, F
all precedence requirements are met and to avoid the
need for multiple edges. It is not an activity in the
I G
project. J G, H

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 480 Chapter 12 ■ Project planning and scheduling 12A

Exercise 12A
Writing precedence tables from activity networks

Example 1 1 Write a precedence table for the activity networks shown below.

SF
a D
A F
Start
C Finish
B G
E
b T
Q
P X
Start S U Finish
V
R W

c L
Q
J
T
M
Start P Finish
K N R
O S
Example 4 d C
A
D
Start E
F
Dummy
B G
Finish
H

e R U
P
S X
V Z
Start Finish
Q
Dummy
T Y
W

f E H
B K
A C F
Start Dummy Finish
J
Dummy
D I
G

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 12A 12A Project planning – precedence tables and activity networks 481  

Drawing activity networks from precedence tables

Example 2 2 Draw an activity network from the precedence tables below.

SF
a b
Activity Immediate Activity Immediate
predecessors predecessors
A − P −
B A Q −
C A R P
D B S Q
E C T R, S
c d
Activity Immediate Activity Immediate
predecessors predecessors
T − F −
U − G −
V T H −
W U I F
X V, W J G, I
Y X K H, J
Z Y L K

Example 3 3 Draw an activity network from the precedence tables below. Dummy activities will be

CF
required.
a b
Activity Immediate Activity Immediate
predecessors predecessors
F − A −
G − B A
H F C A
I H, G D B
J G E B, C
c d
Activity Immediate Activity Immediate
predecessors predecessors
P − A −
Q − B A
R P C A
S Q D B, C
T Q E C
U R, S F E
V R, S, T G D
H F, G

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 482 Chapter 12 ■ Project planning and scheduling

12B Scheduling problems

Projects that involve multiple activities are usually completed against a time schedule.
Knowing how long individual activities within a project are likely to take allows managers
of such projects to hire staff, book equipment and also to estimate overall costs of the
project. Allocating time to the completion of activities in a project is called scheduling.
Scheduling problems involve analysis to determine the minimum overall time it would take
to complete a project.

▶▶Weighted precedence tables

Weighted precedence tables show the Activity Duration Immediate
completion times, or durations, of each of the (days) predecessors
activities that make up a particular project.
A 8 −
The precedence table on the right shows the
B 6 −
activities of a project, the duration of each
activity and the immediate predecessors of C 1 A
each of the activities. D 2 B

The durations are recorded on the activity E 3 C

network that is drawn from the precedence F 1 C, D
table. It is usual to record the name of the G 2 E, F
activity followed by a comma and then the
H 1 G
duration of that activity on the edge that
represents it.
For example, Activity D would be labelled D, 2.
The activity network for this project is shown below. This project requires the use of a
dummy activity. Dummy activities are always considered to have a duration of zero.
C, 1
A, 8 E, 3
G, 2 H, 1
Start Dummy, 0 Finish

B, 6 D, 2
F, 1

The weight (duration) of a dummy activity is always zero.

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 12B Scheduling problems 483  

▶▶Float times
The diagram below shows a small section of an activity network. Three activities are shown,
A, B, C along with their individual durations, in hours.
Activity A and B form a small sequence of activities. A, 5 B, 3
Activity B cannot begin until activity A has finished.
The minimum time it would take to complete activity
C, 6
A and B would be 5 + 3 = 8 hours.
Activity C can begin at the same time as activity A, but must be completed no later than
activity B. The activity network shows that activity C can be completed at the same time
as the sequence of activites A – B. Activity C has a duration of 6 hours, which is two hours
less than the time for the sequence A – B and so there is some flexibility around when
activity C could start. This value is called the float time for activity C. The float time is
sometimes called the slack time.
The flexibility around the timing of activity C is shown in the diagram below.

A A A A A B B B
Start at same time C C C C C C Slack Slack
Delay C by 1 hour Slack C C C C C C Slack
Delay C by 2 hour Slack Slack C C C C C C

The five red squares represent the 5 hours it takes to complete activity A. The three green
squares represent the 3 hours it takes to complete activity B.
This six yellow squares represent the 6 hours it takes to complete activity C. Activity C
does not have to start at same time as activity A because it has some slack time available (2
hours).
Activity C should not be delayed by more than 2 hours because this would cause delays to
the project. The next activity requires B and C to be complete before it can begin.

▶▶Critical path analysis

Scheduling problems are concerned with minimising the total time it takes to complete a
project and so it is essential that all the activities in a project begin at the earliest possible time.
Critical path analysis is the process of analysing the timing of activities of a project to
find the overall minimum time to complete the project. It also involves identifying those
activities that have float time and those that do not. Activities that have no float time are said
to be critical activities because if they are delayed, the whole project will not finish in the
minimum possible time.

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 484 Chapter 12 ■ Project planning and scheduling

Critical path analysis begins with determining the earliest starting time (EST) and the
latest finishing time (LFT) for each activity.
EST values indicate the earliest possible time after the start of the project that a particular
activity can begin and still allow the project to be completed in minimum time. For
example, an EST of 8 hours means that the activity can begin, at the earliest, 8 hours after
the start of the project.
LFT values indicate the latest possible time after the start of the project that a particular
activity can finish and still allow the project to be completed in minimum time. For
example, an LFT of 14 hours means that at the very latest, the activity can finish 14 hours
after the start of the project.
EST values are determined using a process called forward scanning.

Forward scanning
Forward scanning will be demonstrated using the activity network shown below.
C, 1
A, 8 E, 3
G, 2 H, 1
Start Dummy, 0 Finish

B, 6 D, 2
F, 1

1 Draw a box, split into two cells,

next to each vertex of the activity C, 1
A, 8 E, 3
network, as shown. The cells in the G, 2 H, 1
boxes in the diagram are coloured Start Dummy, 0 Finish
yellow and blue to help identify B, 6 D, 2 F, 1
which cell we are using. The left
cell (yellow) at any vertex will
contain the EST for any activity that
begins at that vertex.
2 Put a zero (0) in the left cell C, 1
(yellow) of the box at the start A, 8 E, 3
0 G, 2 H, 1
vertex. This represents the start of Start Dummy, 0 Finish
the entire project. It also represents
B, 6 D, 2
the EST for activities A and B F, 1
because they start at this vertex.

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 12B Scheduling problems 485  

3 Each activity will have a box at the 8 C, 1 9

vertices at either end of the edge A, 8
0 E, 3
that represents that activity. Take G, 2 H, 1
Start Dummy, 0 Finish
the left cell (yellow) value of the
B, 6 D, 2
box at the start of the activity, add F, 1
it to the duration of the activity and 6
write the answer in the left cell (yellow) of the box at the end of the activity. This is the
EST for the activity or activities that follow.
Notes:
1 The cell at the end of activity A has value 0 + 8 = 8. This is the EST for activity C.
2 The cell at the end of activity B has value 0 + 6 = 6. This is the EST for activity D.
3 The cell at the end of activity C has value 8 + 1 = 9. This is the EST for activity E and dummy.

4 If the edges representing more 8 C, 1 9

than one activity end at the same
A, 8 E, 3
vertex, the left cell (yellow) of the 0 G, 2 H, 1
Start Dummy, 0 Finish
box at this vertex must contain
D, 2 12
the largest of the possible values B, 6 F, 1
because this activity must wait 6 9
for all predecessor activities to be
completed before it can begin.
Notes:
1 The cell at the end of activity D and dummy could be:
–– from activity D: 6 + 2 = 8
–– from dummy activity: 9 + 0 = 9
The largest of these options is 9. This is the EST for activity F.
2 The cell at the end of activity E and F could be:
–– from activity E: 9 + 3 = 12
–– from activity F: 9 + 1 = 10
The largest of these options is 12. This 8 C, 1 9
is the EST for activity G.
A, 8 E, 3
0 G, 2 H, 1
5 Continue adding the previous EST Start Dummy, 0 Finish
value to the duration to calculate the D, 2 12 14 15
B, 6 F, 1
following EST values until the final
6 9
cell is reached.

Identifying minimum project completion time

The box for the finish vertex above contains the EST for the next activity, but there is no
activity left to begin. So, this value represents the overall minimum completion time for the
entire project. This project can be completed in a minimum of 15 days.
To complete the analysis, latest finishing time (LFT) values need to be calculated for each
activity.
LFT values are determined using a process called backward scanning.

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 486 Chapter 12 ■ Project planning and scheduling

Backward scanning
1 Look at the box at the finish vertex. 8 C, 1 9
Copy the value in the left cell
A, 8 E, 3
(yellow) to the right cell (blue). The 0 G, 2 H, 1
Start Dummy, 0 Finish
right cell (blue) contains the latest B, 6
D, 2 1212 1414 1515
finishing time (LFT) for any activity F, 1
that ends at this vertex. 6 9 11

The LFT for activity H is 15.

2 For each activity, take the LFT from
8 C, 1 9
the right cell (blue) value of the box
A, 8 E, 3
at the end of the activity and subtract 0
Dummy, 0 G, 2 H, 1
the duration of the activity. Write the Start B, 6 Finish
D, 2 12 14 1515
answer in the right cell (blue) of the F, 1
box at the start of the activity. This 6 9
will give the LFT for any activity
that ends at this vertex.
Notes:
1 The cell at the start of activity H has value 15 − 1 = 14. This is the LFT for activity G.
2 The cell at the start of activity G has value 14 − 2 = 12. This is the LFT for activity E and F .
3 The cell at the start of activity F has value 12 − 1 = 11. This is the LFT for activity D and
dummy.

3 If the edges representing more 8 C, 1 9

than one activity start at the same A, 8 E, 3
0 G, 2 H, 1
vertex, the right cell (blue) of the Start Dummy, 0 Finish
box at this vertex must contain the B, 6
D, 2 1212 1414 1515
smallest of the possible values. F, 1
6 9 11
This ensures that the longest of the
activities that follow this vertex will
have time to be completed.
Note:
1 The cell at the start of activity E and dummy could be:
–– from activity E : 12 − 3 = 9
–– from dummy activity: 11 − 0 = 11
The smallest of these options is 9. This is the LFT for activity C.

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 12B Scheduling problems 487  

4 Complete the backward scanning for all remaining activities.

8 8 9 9
C, 1
A, 8 E, 3
0 0
G, 2 H, 1
Start Dummy, 0 Finish
B, 6
12 12 14 14 15 15
D, 2 F, 1

6 9 9 11

Notes:
1 The cell at the start of activity C has value 9 − 1 = 8. This is the LFT for activity A.
2 The cell at the start of activity D has value 11 − 2 = 9. This is the LFT for activity B.
3 The cell at the start vertex has value, either:
–– from activity A: 8 − 8 = 0
–– from activity B: 9 − 6 = 2
The smallest of these options is 0.
4 The box at the start vertex will always contain a zero in both the left (yellow) and right (blue) cells.

Determining latest starting time (LST)

The forward scanning process identified the EST, earliest starting time, for each activity.
The backward scanning process identified the LFT, latest finishing time, for each activity.
The latest starting time (LST) for an activity is the latest possible time it could start after
the beginning of the project and still allow the project to be completed in minimum time.
The LST for an activity is determined by a simple calculation:
LST = LFT − duration
Activity B from the completed forward and
backward scanning process above is shown in the 0 0
diagram on the right.
Start
The EST for activity B is in the left cell (yellow) B, 6
in the box at the vertex where activity B begins. EST for activity B
The LFT for activity B is in the right cell (blue)
LFT for activity B
in the box at the vertex where activity B ends.
6 9
The LST for activity B = LFT – duration
=9−6
= 3 days

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 488 Chapter 12 ■ Project planning and scheduling

Activity B must be completed, at the latest, after 9 days. Since it has a duration of 6 days,
it can begin 3 days after the start of the project and still finish in time. The latest time it can
start (LST) is 3 days.
The LST for all activities in the project can be found using similar calculations, the results
of which are shown in the table below.

Activity Duration EST LFT LST

LST A = 8 − 8 = 0 A 8 0 8 0
LST B = 9 − 6 = 3 B 6 0 9 3
LST C = 9 − 1 = 8 C 1 8 9 8
LST D = 9 − 2 = 7 D 2 6 9 7
LST E = 12 − 3 = 9 E 3 9 12 9
LST F = 12 − 1 = 11 F 1 9 12 11
LST G = 14 − 2 = 12 G 2 12 14 12
LST H = 15 − 1 = 14 H 1 14 15 14

Determining float time

Some of the activities from the project above have the same EST and LST values in the
table. The earliest start time and the latest start time are exactly the same, which means
that there really is only one start time that is possible in order to make sure the project is
completed in minimum time.
These activities are the critical activities described earlier. They have no flexibility in their
starting time and so have a float time of zero. The critical activities in this project are
A, C, E, G and H.
The non-critical activities B, D, F have float time that is not zero. Float time can easily be
calculated using this rule.
Float time = LST − EST
Float time for activity B = 3 − 0 = 3
Float time for activity D = 7 − 6 = 1
Float time for activity F = 11 − 9 = 3

Identifying the critical path

The critical activities have already been identified as those activities that have zero float
time; that is, those activities that have equal EST and LST.
The critical path through the network is the sequence of these critical activities, from the
start of the project through to the finish.

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 12B Scheduling problems 489  

The critical path has been highlighted in red on the diagram opposite.

8 8 9 9
C, 1

A, 8 E, 3
0 0
G, 2 H, 1
Start Dummy, 0 Finish
B, 6
12 12 14 14 15 15
D, 2
F, 1
6 9 9 9

In most projects, there will be a single critical path from start to finish, but it is possible for
a project to have a critical path that branches. For example, if the time for activity F was
increased to 3 days in the project above, then the LST for F would become 12 − 3 = 9 and
so F and the dummy activity would also be on the critical path.

Critical path analysis

Critical path analysis is the process of analysing the timing of activities in a project to
determine the critical path of a project.
The critical path of a project is the sequence of activities that cannot be delayed without
affecting the overall completion time of the project.
Perform critical path analysis by:
■■ drawing a box with two cells next to each vertex of the activity network
■■ forward scanning to identify EST for each activity
•• add the left cell value at the start of the activity to the duration
•• write the result in the left cell at the end of the activity
•• use the largest of the possibilities if there is more than one activity ending at the
same vertex
■■ identifying the minimum project completion time as the left cell value at the finish vertex
■■ backward scanning to identify LFT for each activity
•• subtract the duration from the right cell value at the end of the activity
•• write the result in the right cell at the start of the activity
•• use the smallest of the possibilities if there is more than one activity beginning at
the same vertex.
EST values are in the left cell at the start of each activity.
LFT values are in the right cell at the end of each activity.
LST = LFT − duration
Float = LST − EST
Critical activities will have zero float; that is, LST = EST
The critical path is the sequence of critical activities through the activity network.

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 490 Chapter 12 ■ Project planning and scheduling

Example 5 Critical path analysis

The activity network for a project consisting of eight activities, A, B, C, D, E, F, G
and H is shown below. The number next to the activity name is the time it takes,
in weeks, to complete that activity.

A, 3 E, 7
D, 4
B, 5 G, 6
Start Finish
F, 5

H, 2
C, 12

a Complete the forward scanning process to identify the minimum time it will take to
complete this project.
b Complete the backward scanning process.
c What is the earliest starting time for activity E?
d What is the latest starting time for activity E?
e Identify the critical path for this project.
f The person responsible for completing activity E falls sick three weeks into the
project. If he will be away from work for two weeks, will this cause the entire project
to be delayed?

Solution
a The forward 3
scanning process
results are shown A, 3 E, 7
D, 4
in the diagram. B, 5 G, 6
Start Finish
0 7 F, 5 12 18

C, 12 H, 2
12

b The backward 3 3
scanning process
results are shown E, 7
A, 3 D, 4
in the diagram. B, 5 G, 6
Start Finish
0 0 7 7 F, 5 12 12 18 18

C, 12 12 16 H, 2

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 12B Scheduling problems 491  

c Earliest starting 3 3
time is the left cell
value of the box at E, 7
the beginning of the
activity. 12 12
The EST for activity E = 3
d Latest starting 3 3
time is found by
subtracting the duration E, 7
of the activity from the
right cell box at the end 12 12
of the activity.
The LST for activity E = 12 - 7 = 5
e The critical path joins The critical path for this project is A - D - F - G.
all of the activities
that have the same
EST and LST, and
therefore which have
zero float time.
f 1     Calculate the float Float E = LST − EST
for activity E. This =5−3
tells us how long the = 2 weeks
start of activity E can
be delayed, without
delaying the entire
project.
2 If the float time is The person will be away for two weeks, starting 3 weeks into
more or equal to the the project. This is equal to the float time for activity E, and
delay in the start so delaying the start of activity E until the person comes back to
of activity E, the
work will not affect the overall completion time of the project.
project will not be
affected.

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 492 Chapter 12 ■ Project planning and scheduling 12B

Exercise 12B
Skillsheet Interpreting completed forward and backward scanning

Example 5 1 The activity network below shows the results of forward and backward scanning.

SF
9 9 C, 8 26 26 F, 12
Finish
A, 6 38 38
0 0
D, 7 E, 10
Start
Dummy, 0
B, 9
16 16
9 9
a What is the minimum completion time for this project?
b What is the duration of activity C?
c What is the EST of activity C?
d What is the LFT of activity C?
e   i Calculate the LST of activity C.
ii Explain how you know that activity C is not a critical activity.
f There is one other non-critical activity in the project. Which one is it?
2 Consider the section of an activity network shown in the diagram below.
a What is the duration of activity A?
b What is the float time of activity B? 9 9
c What is the duration of activity D?
d What is the latest time that A C
6 6
activity D can start?
15 15
e Write down the critical path
through this section of the
B D
activity network.
8 13
Critical path analysis
3 Consider the activity network in the diagram shown below.
a Complete forward and backward scanning for this activity network.
b What is the minimum 4 4
completion time for this
A, 4
project? C, 4
0 0 F, 3
c Write down the critical E, 2
Start Finish
path for this project. D, 5 8 8
d For each non-critical B, 6 Dummy
activity, calculate the:
i LST
ii float time
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 12B 12B Scheduling problems 493  

4 Consider the activity network in the diagram shown below.

a Complete forward
and backward B, 8
scanning for this A, 3 E, 10
activity network. D, 12
b What is the minimum Start Finish
C, 7 F, 20
completion time for
this project?
c Write down the critical path for this project.
d For each non-critical activity, calculate the:
i LST
ii float time

5 Consider the activity network shown in the diagram below.

CF
F, 1 14 14
10 11 13 13
D, 2
A, 10
H, 3
B, 9 E, 4 G, 1
0 0 18 18
9 9
14 15
C, 3 I, 2 J, 1

17 17
a Complete the table of durations, EST, LFT, LST and float below.

Activity Duration EST LFT LST Float

A 10 11 1 1
B 0 9
C 3 0 14 14
D 2 13 11
E 4 9 10 0
F 13 14 0
G 1 15 14 1
H 14 14
I 2 14 17 1
J 1 18 17 0

b Write down the critical path for the project.

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 494 Chapter 12 ■ Project planning and scheduling 12B

6 Consider the precedence table for the

Activity Duration Immediate
activities in a project shown to the right.
(weeks) predecessors
a Draw an activity network for this
project. P 4 −
b Complete the forward and backward Q 5 −
scanning for this project. R 12 −
c What is the shortest time, in weeks,
S 3 P
in which this project could be
completed? T 6 Q
d Use the activity network and results U 3 S
of scanning to write down the critical V 4 R
path for this project.
W 8 R, T, U
e Complete the table below to find the
X 13 V
float times for every activity in the
project. Y 6 W, X

Activity Duration EST LFT LST Float

P 4
Q 5
R 12
S 3
T 6
U 3
V 4
W 8
X 13
Y 6
Note: you could use a spreadsheet to complete the calculations in this table.

f Use the table to verify that you identified the critical path correctly.

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 12B 12B Scheduling problems 495  

7 Consider the precedence table for the

Activity Duration Immediate
activities in a project shown on the right.
(weeks) predecessors
a Draw an activity network for this
project. I 2 −
b Complete the forward and backward J 3 −
scanning for this project. K 5 −
c What is the shortest time, in weeks,
L 4 I
in which this project could be
completed? M 8 J, N
d Use the activity network and results N 1 K
of scanning to write down the critical O 6 L, M
path for this project.
P 6 J, N
e Complete the table below to find the
Q 7 J, N
float times for every activity in the
project. R 5 K
S 1 O
T 9 Q, R

Activity Duration EST LFT LST Float

I 2
J 3
K 5
L 4
M 8
N 1
O 6
P 6
Q 7
R 5
S 1
T 9
Note: you could use a spreadsheet to complete the calculations in this table.

f Use the table to verify that you identified the critical path correctly.

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 496 Chapter 12 ■ Project planning and scheduling

12C Applications of critical path analysis

To complete your study of problem planning and scheduling problems, you will see some
realistic applications of critical path analysis.

Example 6 Application of critical path analysis

Linda is building a new house and has decided to manage the project herself.
She has decided on the major activities involved in this build and has been given some
advice regarding the length of time each activity is expected to take.
These activities and their durations are shown in the table below.

Activity Description Duration Immediate

(days) predecessors
A Preparing site and laying slab 5 -
B Constructing frame and roof 25 A
C Preparing floor 3 A
D Landscaping gardens 10 B
E Installing plants and lawn 3 D
F Installing electrical 4 B
G Installing plumbing 6 B, C
H Finishing off ready to move in 5 F, G

a Construct an activity network for this project.

b Apply the forward scanning technique to determine the shortest time in which Linda
can expect completion of her house.
c Apply the backward scanning technique and then complete the following.
i Construct a table that shows the EST, LFT, LST and float for each activity.
ii Which of the activities will cause a delay in the entire project if they take longer
than expected?
iii Write down the critical path of this project.
d i   If the electrical work takes 2 days longer than expected, what effect will this have
on the overall project?
ii Assuming that all other activities have no delay, what is the maximum delay
possible for the floor preparation so that the project as a whole is not delayed?

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 12C Applications of critical path analysis 497  

Solution
a D, 10
B, 25
F, 4
E, 3
Start Dummy, 0
A, 5
Finish
C, 3 H, 5
G, 6

b 30
D, 10 40
B, 25
F, 4
0 E, 3
Start 5 Dummy, 0
A, 5
Finish
C, 3 36 H, 5
43
G, 6
30

The house can be expected to be completed in 43 weeks.

c 30 30
D, 10 40 40
B, 25
F, 4
0 0 E, 3
Start 5 5 Dummy, 0
A, 5
Finish
C, 3 36 38 H, 5 43 43
G, 6
30 32

Activity Duration EST LFT LST Float

i (days)
A 5 0 5 0 0
B 25 5 30 5 0
C 3 5 32 29 24
D 10 30 40 30 0
E 3 40 43 40 0
F 4 30 38 34 4
G 6 30 38 32 2
H 5 36 43 38 2

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 498 Chapter 12 ■ Project planning and scheduling 12C

ii The activities with zero float time will cause a delay to the entire project if they take longer
than expected. These activities are preparing site and laying of slab (A), constructing frame
and roof (B), landscaping the gardens (D) and installing the plants (E).
iii The critical path of this project is A - B - D - E.
d i The activity Installing electrical is activity F. Since activity F is not on the critical path, a
delay will not necessarily affect the completion time of the project. Two days is less than the
float time of activity F and so there will be no effect.
ii The activity ‘Preparing floor’ is activity C. Since C is not on the critical path, it may be
delayed without affecting the completion time of the project. The float time for activity C is
24 days and so it may be delayed by a maximum of 24 days without delaying the project
as a whole.

Exercise 12C
Example 6 1 Sharon’s car washing business offers a premium service that involves five activities.

CF
These activities, their durations and their immediate predecessors are shown in the
table below.

Activity Description Duration Immediate

(minutes) predecessors
A Wash the car 15 -
B Dry the car 8 A
C Wax the car 20 B
D Clean the interior 35 B
E Polish and shine the car 30 C

a Construct an activity network for this project.

b Apply the forward scanning technique to determine the shortest time in which the
premium service can be expected to be completed.
c Apply the backward scanning technique and then answer the following questions.
i Construct a table that shows the EST, LFT, LST and float for each activity.
ii Which of the activities will not cause the premium service to take longer than
expected if they were delayed?
iii Write down the critical path of this project.
d The person responsible for cleaning the interior of the car has been delayed while
working on another car. What is the latest time, in minutes after the project begins,
that she can start the interior cleaning and still finish cleaning the car on time?

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 12C 12C Applications of critical path analysis 499  

2 Robyn is planning a reunion of her primary school classmates. The activities involved
in planning the event are shown in the table below, along with the duration and
immediate predecessors of each activity.

Activity Description Duration Immediate

(days) predecessors
A Locate and contact classmates 5 -
B Choose a venue for the reunion 3 -
C Organise decorations 2 B
D Invite classmates 1 A
E Wait for responses from classmates 7 D
F Book tables 1 B, E
G Send directions to venue 1 B, E
H Hold the reunion 1 C, F, G

a Construct an activity network for this project. Two dummy activities will be
required.
b Apply the forward scanning technique to determine the shortest time in which the
reunion is expected to be completed.
c Apply the backward scanning technique and then answer the following questions.
i Construct a table that shows the EST, LFT, LST and float for each activity.
ii This project has two critical paths. Write down both of them.
d Use the information in the table from ci to explain what would happen if the
classmates took 9 days to send their responses to Robyn instead of 7.

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 500 Chapter 12 ■ Project planning and scheduling 12C

3 Anthony is creating a robot for a university project. The activities required to design
and build the robot are shown in the table below, along with their duration in days and
the immediate predecessor for each activity.

Activity Description Duration Immediate

(weeks) predecessors
A Research robot design and control 5 -
B Design the internal electronics 8 A
C Design the remote control 3 A
D Construct and assemble the robot 15 B
E Write the code to control the robot 10 B
F Construct and program the remote 6 C
control
G Debug the code to control the robot 4 E
H Install the software 1 D, F
I Test the robot 3 G, H

a Construct an activity network for this project.

b Apply the forward scanning technique to determine the shortest time in which
Anthony can expect to create his robot.
c Apply the backward scanning technique and then answer the following questions.
i Construct a table that shows the EST, LFT, LST and float for each activity.
ii Write down the critical path of this project.
d Use the information in the table from ci to describe and explain what would
happen if Anthony took:
i 3 weeks to research robot design and control instead of 5
ii 10 weeks to construct and program the remote control instead of 6
iii 20 weeks to construct and assemble the robot instead of 15

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 Chapter 12 Review 501  

Review
Key ideas and chapter summary

Project A project is a task that involves a number of individual steps

AS or activities.

Activity An activity is an individual step in the completion of a project.

Project planning Project planning involves the analysis and organisation

of the activities in a project, taking into account the order
in which they must be completed and the time it takes to
complete each activity.

Activity network A directed graph that represents the activities in a project is

called an activity network. Edges are used to represent the
activities, and these are labelled with the name of the activity
and the duration. Vertices of an activity network are not
labelled, except for the ‘Start’ and ‘Finish’ vertices.

Immediate predecessor If activity M must be completed before activity N, then

activity M is an immediate predecessor of activity N.

Precedence table A table that shows all of the activities in a project and their
immediate predecessors. Precedence tables may also show
the duration of each activity.

Dummy activity A dummy activity is used to preserve all precedence

information in situations where activities share some, but not
all, of the same immediate predecessors. Dummy activities
have no duration.

Scheduling problem Scheduling problems involve analysis of the precedence

relationship between activities of a project and their
durations in order to determine the minimum overall time it
would take to complete the project.

Weighted precedence table A weighted precedence table is a precedence table that also
contains the durations of the activities.

Float time Float time is also called slack time. It is the largest amount
of time by which the activity can be delayed without
affecting the overall completion time of the project.
The float time for an activity is the difference between the latest
starting time and the earliest starting time of that activity.
Float = LST − EST

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 502 Chapter 12 ■ Project planning and scheduling
Review

Critical path The critical path for a project is the sequence of activities
that cannot be delayed without affecting the overall
completion time of the project. Activities on the critical
path have float times of zero, that is the EST and
LST are the same. A project may have more than one
critical path.

Critical path analysis Critical path analysis is the process of using knowledge
of the precedence and duration for each activity to
determine the critical path of a project.

Earliest starting time (EST) The earliest starting time for an activity is the
earliest time after the start of the project that an
activity can begin. Earliest starting time is referred to
as EST.

Latest finishing time (LFT) The latest starting time for an activity is the latest time
after the start of the project that an activity can finish
without affecting the overall completion time of the
project. Latest finishing time is referred to as LFT.

Forward scanning Forward scanning is the process of determining the

EST for each activity in a project. The EST of an
activity is added to the duration of the activity to
determine the EST of the activities that immediately
follow. The EST of any activity is equal to the largest
forward scanning value determined from all immediate
predecessors.

Backward scanning Backward scanning is a process of determining the LFT

for each activity in a project. The duration of an activity
is subtracted from the LFT of activities that immediately
follow. The LFT of any activity is equal to the smallest
backward scanning value determined from all activities
that immediately follow that activity.

Minimum completion time The overall shortest amount of time in which the project
can be completed.

Latest starting time (LST) The latest starting time of an activity is the latest time
that activity can start without affecting the overall
completion time of the project. Latest starting time is
referred to as LST.
For any activity, LST = LFT − duration.

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Review
Skills check
Having completed this chapter, you should be able to:

■■ identify activities in a project

■■ understand the precedence that some activities over others in a project
■■ identify immediate predecessors of activities from an activity network
■■ draw an activity network from a precedence table
■■ understand and explain the need for dummy activities in projects
■■ include dummy activities in activity networks as required
■■ create activity networks that include weights (durations) of each activity
■■ understand the existence of float times for some activities
■■ determine the EST for activities using forward scanning
■■ determine the LFT for activities using backward scanning
■■ calculate the LST for activities
■■ calculate the float time for activities
■■ complete critical path analysis to identify the critical path for a project.

Multiple-choice questions
1 This activity network is for a project where the component times, in days, are as
shown. The critical path for the network of this project is given by:
A A–B–E–I–K E, 3
B A–D–H–I–K B, 4 I, 3
A, 5 D, 6 H, 3
C A–C–G–H–I–K Start Finish
G, 2 K, 6
D A–C–F–J–K C, 3 J, 1
E A–D–G–F–J–K F, 6

2 The activity network shown represents a project development with activities and their
durations (in days) listed on the edges of the graph. Note that the dummy activity takes
zero time.
C, 5
F, 5
A, 9 Finish
D, 7 G, 6
Start Dummy
B, 7 E, 8

The earliest time (in days) that activity F can begin is:
A 0 B 12 C 14 D 22 E 24

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 504 Chapter 12 ■ Project planning and scheduling
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3 The edges in this activity network B, 6

correspond to the tasks involved in the A, 3 E, 2
preparation of an examination.
D, 5
The numbers indicate the time, in H, 6
weeks, needed for each task. The C, 2 G, 4
total number of weeks needed for the F, 3
preparation of the examination is:
A 14 B 15 C 16 D 17 E 27

4 This activity network represents a manufacturing E, 1

A, 2
process with activities and their duration G, 1
Start
(in hours) listed on the edges of the graph. C, 4 F, 2 Finish
The earliest time (in hours) after the start of B, 3
D, 2 H, 4
manufacturing that activity G can begin is:
A 3 B 5 C 6 D 7 E 8

5 This network represents a project development with activities listed on the edges of the
graph.
Which of the following statements must be true?
D
C I
A E J
H K
B F
G

A A must be completed before B can start.

B A must be completed before F can start.
C E and F must start at the same time.
D E and F must finish at the same time.
E E cannot commence while A is still taking place.

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6 The table that shows the immediate predecessors for the activity network shown
below is:

C
A
Dummy E
Start
B F
Finish
D

A B
Activity Immediate Activity Immediate
predecessors predecessors
A − A −
B − B A
C A, B C A, B
D B D B
E C E C
F E F D, E

C D
Activity Immediate Activity Immediate
predecessors predecessors
A − A −
B A B −
C A, B C A
D B D A, B
E C E C
F D, E F D, E

E
Activity Immediate
predecessors
A −
B −
C A
D A, B
E C
F D

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 506 Chapter 12 ■ Project planning and scheduling
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Use this information to answer questions 7 to 10

The activity network below shows the activities required to complete a particular project
and the durations, in hours, of those activities.
D, 2
H, 3
A, 2 E, 6
B, 6 F, 7 I, 4 J, 3
Start Finish
Dummy, 0
C, 4 G, 12

7 The earliest time that activity I can start is:

A 11 B 12 C 13 D 14 E 15

8 The latest starting time for activity E is:

A 7 B 8 C 9 D 10 E 11

9 The float time of activity H is:

A 2 B 3 C 4 D 5 E 6

10 The critical path for the project is:

A A−D−H−J
B C−G−J
C C − Dummy − E − H − J
D C − Dummy − F − I − J
E B−F−I−J

Short-answer questions
1 An activity network is shown below.
D SF
C
I
A E J
H K
F
B G
a Which activities are immediate predecessors for activity D?
b For which activities is activity B an immediate predecessor?
c How many immediate predecessors does activity H have?

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2 A precedence table for a project is shown below.

Activity Immediate Duration

predecessors (weeks)
A - 5
B - 6
C - 3
D C 8
E B 2
F D, E 5
G A, F 4

a Draw an activity network for this project.

b Perform the forward scanning process and determine the shortest time in which this
project could be completed.

3 The activity network for a project is shown below. All durations in this
network are in days.

11 11 G, 4 15 15

J, 3
E, 4 Dummy, 0
0 0 30 30
A, 6 F, 6 I, 2 K, 12
Start Finish
7 7 13 16 18 18
B, 5 C, 2 H, 3

5 5 D, 2 7 13

The forward scanning and backward scanning processes have already been completed.
a How many days will it take to complete this project?
b What is the earliest starting time for activity I?
c What is the float time for activity A?
d Write down the critical path for this project.

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 508 Chapter 12 ■ Project planning and scheduling
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4 The activity network for a project is shown below. All durations in this network are
in hours.
D, 5 J, 7

A, 8 F, 6 K, 2 L, 3
B, 10 H, 4 M, 4
Start Finish

C, 5 E, 4 G, 8 I, 5 N, 1

a Construct a precedence table for this project.

b Complete the forward scanning process to determine the shortest time in which this
project can be completed.
c Complete the backward scanning process and write down the critical path for this
project.

Extended-response questions
1 The assembly of machined parts in a manufacturing process can be represented by the

CF
following network. The activities are represented by letters on the arcs and the
numbers represent the time taken (in hours) for the activities scheduled.

2 18
C, 2 G, 4
A, 2 D, 2 J, 4
F, 1 H, 8
Start Finish
B, 1 E, 6 I, 5 K, 2
4 10 17 22 22 24 24

Activities A B C D E F G H I J K
EST 0 0 2 2 4 4 10 10 18 22

a The earliest start times (EST) for each activity except G are given in the table.
Complete the table by finding the EST for G.
b What is the shortest time required to assemble the product?
c What the float (Slack time) for activity I?

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2 A precedence table for a project is shown below.

Activity Immediate
A −
B −
C B
D A, C
E A, C
F E
G D
H D
I H, F
J G, I

a Draw the activity network for this project.

b Complete the forward and backward scanning processes to find the minimum
number of days in which this project could be completed.
c Complete the table of EST, LFT, LST and float values.

Activity Duration (days) EST LFT LST Float

A 10
B 5
C 3
D 5
E 4
F 6
G 6
H 7
I 5
J 4

d Explain what it means for an activity to be on the critical path for a project.
e Identify the feature of the table above that allows you to write down the critical
path for this project.
f Write down the critical path for this project.
g Explain what would happen to the completion time of the project if activity C
started 1 day later than expected.

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 510 Chapter 12 ■ Project planning and scheduling
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3 The Bowen Yard Buster team J, 2

CU
specialises in backyard improvement
C, 2
projects. The team has identified the
D, 4 L, 3
activities required for a backyard
improvement. The network diagram A, 3 E, 2 H, 3
to the right shows the activities F, 1 K, 3 M, 3
Start Finish
identified and the actual times, in B, 2
G, 3 I, 3
hours, needed to complete each
activity, that is, the duration of each
activity.
The table below lists the activities, their immediate predecessor(s) and the earliest
starting time (EST), in hours, of each of the activities. Activity X is not yet drawn on
the network diagram.
a Use the information in the network diagram to complete the table.
b Draw and label activity X on the network diagram above, including its direction
and duration.
c The path A − D − H − K − M is the only critical path in this project.
i Write down the duration of path A − D − H − K − M.
ii Explain the importance of the critical path in completing the project.

Activity Immediate predecessor(s) EST

A − 0
B − 0
C A 3
D A 3
E 3
F B, E 5
G B, E 5
H D 7
I G
J C, X 8
K F, H 10
L J 10
M I, K
X D 7

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d To save money, Bowen Yard Busters decide to revise the project and leave out
activities D, G, I and X. This results in a reduction in the time needed to complete
activities H, K and M as shown.
J, 2
C, 2
L, 3
H, 2
A, 3
B, 2 E, 2 K, 1 M, 2
Start Finish
F, 1

i For this revised project network, what is the earliest starting time for
activity K?
ii Write down the critical path for this revised project network.
iii Without affecting the earliest completion time for this entire revised project,
what is the latest starting time for activity M?

4 The activity network for a project is shown in the diagram below. The duration for
each activity is in hours.

D, 4
A, 3
E, 5 H, 8
Start
B, 6 G, 3 Finish
J, 3
F, 4 I, 7
C, 2

a Identify the critical path for this project.

b What is the maximum number of hours by which the completion time for activity E
can be reduced without affecting the critical path of the project?
c What is the maximum number of hours by which the completion time for activity
H can be reduced without affecting the critical path of the project?
d Every activity can be reduced in duration by a maximum of 2 hours. If every
activity was reduced by the maximum amount possible, what is the new minimum
completion time for the project?

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 512 Chapter 12 ■ Project planning and scheduling
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5 In laying a pipeline, the various jobs involved have been grouped into a set of specific
tasks A − K, which are performed in the precedence described in the network below.
G
D F J
I
A
Start Finish
E H K
B C

a List all the task(s) that must be completed before task E is started.
The durations of the tasks are given in Table 16.7.
b Use the information in Table 16.7 to complete Table 16.8.

Table 16.7 Task durations

Task Normal completion

time (months)
A 10
B 6
C 3
D 4
E 7
F 4
G 5
H 4
I 5
J 4
K 3

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Table 16.8 Starting times for tasks

Task EST LST

A 0 0
B 0
C 6 7
D 10 10
E 11
F 14 14
G 14 18
H 18 20
I 18
J 23 23
K 22 24

c For this project:

i write down the critical path
ii determine the length of the critical path (that is, the earliest time the project can
be completed)
d If the project managers are prepared to pay more for additional labour and
machinery, the time taken to complete task A can be reduced to 8 months, task E
can be reduced to 5 months and task I can be reduced to 4 months.
Under these circumstances:
i what would be the critical path(s)?
ii how long would it take to complete the project?

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 13
Chapter 13
Revision

Revision of Unit 4
Chapters 7–12

UNIT 4 INVESTING AND NETWORKING

Topic 1 Loans, investments and annuities

Topic 2 Graphs and networks

Topic 3 Networks and decision mathematics

The revision exercises are arranged by chapter with these

categories of questions:
▶▶ Simple familiar question types
▶▶ Complex familiar question types
▶▶ Complex unfamiliar question types

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13A Topic 1 Loans, investments and annuities
Multiple-choice questions
Use the following information to answer question 1 and 2.
The balance of a compound interest investment after n quarters, An, can be modelled by the
recurrence relation A0 = 50 000, An+1 = 1.021 × An

1 The balance of the investment after one year is:

A $50 000
B $51 050
C $52 122.05
D $53 216.61
E $54 334.16

2 The annual percentage rate of interest for this investment is:

A 0.21% B 2.1% C 21% D 0.84% E 8.4%

3 Ali would like to borrow some money with a compound interest loan. The principal
and all interest will be paid back at the end of the loan period. He would like to pay as
little interest as possible. Which one of the following interest rates should he choose?
A 6.1% per annum, compounding weekly
B 6.1% per annum, compounding monthly
C 6.2% per annum, compounding quarterly
D 6.2% per annum, compounding monthly
E 6.2% per annum, compounding annually

4 A principal of $14 000 is invested and will earn compound interest at the rate of
2.8% per annum, compounding weekly. The effective annual rate of interest for this
investment is closest to:
A 2.80% B 2.81% C 2.82%
D 2.83% E 2.84%

5 Eli borrowed some money. He will be charged compound interest at the rate of 7.08%
per annum, compounding monthly. After one year, Eli repaid $6674.95 as principal
and interest. The amount borrowed was closest to:
A $6000 B $6100 C $6200
D $6300 E $6400

6 The balance of a reducing-balance loan after n months, An, can be modelled by the
recurrence relation A0 = 250 000, An+1 = 1.003125 × An − 2300.
The total interest that has been paid after one repayment is closest to:
A $781 B $1519 C $1558
D $2300 E $3042

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 516 Chapter 13 ■ Revision of Unit 4 Chapters 7–12
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7 A loan of $180 000 is charged compound interest at the annual percentage interest
rate of 3.24% per annum, compounding monthly. The loan is repaid with monthly
repayments of $1200. If An is the balance of the loan after n months, which one of the
following is a recurrence relation model for this loan?
A A0 = 180 000, An+1 = 1.0324 × An − 1200
B A0 = 180 000, An+1 = 1.00324 × An − 1200
C A0 = 180 000, An+1 = 1.27 × An − 1200
D A0 = 180 000, An+1 = 1.027 × An − 1200
E A0 = 180 000, An+1 = 1.0027 × An − 1200

8 A repayment schedule for the first two repayments of a reducing-balance loan is

shown below.
Repayment Repayment Interest Principal Balance of
number amount paid reduction loan
0 0 0 0 40 000.00
1 400.00 160.00 240.00 39 760.00
2 400.00 159.04 240.96 39 519.04

Which one of the following is the next line of this repayment schedule?
A
3 400.00 158.08 241.92 39 277.12
B
3 400.00 159.04 240.96 39 278.08
C 3 400.00 240.96 39 360.00
159.04
D
3 400.00 241.92 158.08 39 360.96
E
3 400.00 243.21 156.79 39 362.25

9 A reducing-balance loan has a current balance of $65 000. Interest is charged at the
rate of 8.28% per annum, compounding monthly. Repayments of $1500 are made each
month.
How many repayments does it take to reduce the balance of this loan below $60 000
for the first time?
A 4 B 5 C 6 D 7 E 8

10 The balance of a reducing-balance loan with principal $350 000 has been reduced to
$250 031.74 after six years of monthly repayments. If each repayment had value $2400,
the annual percentage rate of interest is closest to:
A 3% B 3.5% C 4% D 4.5% E 5%

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11 Which one of the following recurrence relations could be a model for an annuity in
withdrawal phase with principal $256 000, earning interest at an annual percentage rate
of interest of 7.6% compounding quarterly and with quarterly payments of $7500?
A A0 = 256 000, An+1 = 0.76 × An − 7500
B A0 = 256 000, An+1 = 1.019 An − 7500
C A0 = 256 000, An+1 = 1.076 × An − 7500
D A0 = 256 000, An+1 = 1.19 × An − 7500
E A0 = 256 000, An+1 = 1.76 × An − 7500

12 Elvira has inherited $100 000 and will invest this money into an annuity from which
she will withdraw monthly payments. Interest will be earned at the rate of 4.68% per
annum, compounding monthly. If the balance of Elvira’s investment was $93 463.21
after five payments have been withdrawn, what is the value of Elvira’s monthly
payment?
A $1024.22 B $1307.36 C $1396.75 D $1687.20 E $6536.79

13 Which one of the following recurrence relations could be a model for a perpetuity?
A A0 = 85 000, An+1 = 1.035 × An − 3570
B A0 = 85 000, An+1 = 1.039 × An − 3570
C A0 = 85 000, An+1 = 1.041 × An − 3570
D A0 = 85 000, An+1 = 1.042 × An − 3570
E A0 = 85 000, An+1 = 1.065 × An − 3570

14 Arthur has invested $40 000 in an annuity. His investment will earn interest at the rate
of 7.44% per annum, compounding monthly. Arthur will withdraw $1200 a month
from this annuity.
How many payments of $1200 can Arthur expect from this annuity?
A 37 B 38 C 39 D 40 E 41

15 A perpetuity will be set up to provide an annual prize of $800 to the winner of a

mathematics competition. Interest will be earned on the principal of the investment at
the rate of 4 % per annum and this will be used to pay the prize money every year. The
amount that must be invested is:
A $2000 B $3200 C $20 000 D $80 000 E $320 000

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Short-answer questions
▶▶Simple familiar questions
1 The following recurrence relation can be used to model a compound interest
investment of $10 000 earning interest at the rate of 7.68% per annum, compounding
monthly.
A0 = 10 000, An+1 = 1.0064 × An
In this recurrence relation, A0 is the balance of the investment after n months.
a Apply the recurrence relation to find the balance of the investment after one, two
and three months.
b How many months will it take for the balance of this investment to first exceed
$10 500?

2 Erica has invested $14 500 into an account that pays compound interest at the rate of
4.8% per annum, compounding monthly.
a Construct a recurrence relation model for the balance of Erica’s investment after n
months.
b Apply the recurrence relation to determine the balance of Erica’s investment after
three months.
c Using the compound interest formula, what will the balance of Erica’s investment
be after two years?

3 Jack has borrowed $4500 to buy furniture for his home. He will be charged compound
interest at the rate of 10.2% per annum, compounding monthly.
Let An be the balance of Jack’s loan after n months.
a What is the monthly percentage rate of interest for this loan?
b Construct a recurrence relation that models the balance of Jack’s loan.
c If Jack will pay the principal and all interest charged after one year, how much
money will he have to repay?

4 Hugh has invested $25 000 in an account that will pay compound interest every month,
at the annual percentage rate of interest of 3.84%.
a Use the compound interest rule to determine the balance of Hugh’s investment after
three years.
b How much interest has been earned in total after three years?

5 Dorothy borrowed some money to pay for a travelling holiday. The annual percentage rate
of interest for her loan was 8.76%, compounding monthly. Dorothy repaid the principal
and all interest charged. a total sum of $13 057.59, after travelling for six months.
Use the compound interest rule to determine the principal amount that Dorothy
borrowed.

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6 A reducing-balance loan is modelled using the recurrence relation shown below.
A0 = 3000, An+1 = 1.0024 × An − 150
In this recurrence relation, An is the balance of the loan after n weekly repayments.
a What is the principal of this loan?
b What is the value of the weekly repayments?
c What is the annual percentage rate of interest?
d What is the balance of this loan after five repayments?

7 Celia is considering borrowing $50 000 to buy a caravan. Her bank will charge interest
at the rate of 7.08% per annum, compounding monthly. Celia can afford to make
monthly repayments of $500 to repay the loan.
Let An be the balance of Celia’s loan after n months.
a What is the monthly percentage rate of interest for Celia’s loan?
b Construct a recurrence relation model for the balance of Celia’s loan after n months.
c Apply the recurrence relation to determine the balance of Celia’s loan after six months.
d How many months will it take for Celia’s loan to have a balance that is below
$48 000 for the first time?

8 Gracie has a loan of $12 000 that she will repay with monthly repayments of $450.
Interest is charged at the percentage annual interest rate of 6.24%.
a Determine the balance of Gracie’s loan after six repayments have been made.
b How much interest has been paid in total after six repayments have been made?

9 A loan of $5000 is repaid with monthly repayments of $250. Interest is charged at the
annual percentage interest rate of 7.32%.
a Use the annuities formula to determine the balance of this loan after five
repayments have been made.
b Calculate the total interest that has been paid after five repayments have been made.

10 A little while ago, Trent borrowed some money from a bank. The bank charges interest
at the annual percentage rate of 4.68% and Trent has been repaying his loan with
monthly repayments of $400. Trent still owes the bank $21 385.76 after three years of
monthly repayments.
Use the annuities formula to determine the amount of money that Trent initially
borrowed.

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11 The balance of an annuity, An, after n monthly payments have been received is
modelled by the recurrence relation below.
A0 = 250 000, An+1 = 1.0031 × An − 1800
a What is the percentage annual rate of interest for this annuity?
b How much is left invested in this annuity after five payments have been received?
c Calculate the total amount of interest that has been earned after five payments have
been received.

12 Georgina has $145 000 to invest in an annuity. Interest will be paid at the annual
percentage interest rate of 4.08%, compounding monthly. Georgina will withdraw a
payment of $2500 each month from the investment.
Let An be the balance of Georgina’s annuity after n monthly payments have been
withdrawn.
a Construct a recurrence relation model for the balance of Georgina’s investment
after n payment withdrawals.
b Apply the recurrence relation to calculate the amount remaining in Georgina’s
investment after five payments have been withdrawn.
c Calculate the total interest that Georgina has earnt after five payments have been
withdrawn.

13 Use the annuities formula to determine the balance of an annuity with principal
$120 000 earning interest at the rate of 8.4% per annum, compounding quarterly, and
with quarterly withdrawals of $6000 after 5 years.

14 An advertising agency has invested $140 000 in a perpetuity. The interest earned
each month by this investment will pay for a monthly award to a high performing
employee.
a If the interest on the investment is paid at the rate of 5.16% per annum, what is the
value of the prize awarded each month?
b If the prize has value $800 per month, what is the annual percentage rate of interest
for the investment? Round your answer to two decimal places.

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Extended-response questions
▶▶Complex familiar questions
1 Brian has $35 000 to invest. He has two investment options:
••
Bank A offers to pay 4.68% per annum compounding monthly
••
Bank B offers to pay 4.56% per annum compounding fortnightly
Brian would like to withdraw his money and all of the interest it has earned after a
period of three years.
a Which of the two investment options would earn Brian the most interest after one
year? Explain how you compared the two investment options.
b Write a letter to Brian explaining the comparison of the two investment options,
showing him the calculations for the total amount he could withdraw after three years.

2 Edward has borrowed $5000. He will be charged interest at the rate of 11.4% per
annum, compounding monthly.
a Let An be the balance of Edward’s loan after n months.
i Construct a recurrence relation that models the value of An from month to
month.
ii Write down a rule for An in terms of n only.
b Edward is planning to repay his loan and all interest charged after eight months.
After the fifth month of the loan, the interest rate was increased to 11.88% per
annum, compounding monthly.
Calculate the total amount that Edward must repay. Round your answer to the
nearest dollar.

3 Cleo borrowed $120 000 and has been charged compound interest at the annual
percentage interest rate of 7.68%, compounding monthly. After two years of
repayments, Cleo will still owe a balance of $107 342.34 on her loan.
a Determine the monthly repayment that Cleo has been paying.
b How much will Cleo owe after a further three years of repayments?
After the first two years of repayments, Cleo increases her repayment amount so that
her loan will be fully repaid after four further years.
c Determine the new monthly repayment for this loan. Round your answer to the
nearest cent.

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4 Fillipe would like to buy an apartment and he will need to borrow $250 000 to pay for
this. Interest will be charged at the annual percentage interest rate of 3.96%.
a Fillipe plans to repay his loan over a period of 25 years.
i Calculate the monthly repayment amount required to achieve this aim. Round
your answer to the nearest cent.
ii Using the rounded repayment amount, calculate the balance of the loan after
25 years.
iii This amount is positive. Explain the significance of this amount.
b After four years of repayments (48 repayments), Fillipe will make a lump sum
repayment of $50 000. How many further repayments will be required to repay the
loan? Round your answer to the nearest whole number.

5 Luther receives monthly payments of $5400 from an annuity that is earning interest
at the rate of 6.12% per annum, compounding monthly. The balance of Luther’s
investment is $326 296.83 after four years of investment.
a What is the principal amount of Luther’s investment?
b How much interest has Luther earned after four years of investment?
c How many more payments of $5400 can Luther withdraw?

6 Vusa has recently retired and will invest his superannuation payment into an annuity
that will earn interest at the rate of 6.8% per annum, compounding quarterly. The
principal amount of this investment will be $396 000.
a If Vusa withdraws a payment of $20 000 per quarter, how many payments in total
can he expect to withdraw?
b What is the balance of Vusa’s investment after three years of repayments?
Vusa decided to increase his monthly payment after three years of investment. He will
now withdraw monthly payments of $25 000 until his investment is fully exhausted.
c How many payments of $25 000 can he expect?
d His final payment will be smaller than $25 000. How much will this final
payment be?

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▶▶Complex unfamiliar questions

Revision
7 Leanne currently owes $138 500 on her home loan. She pays interest at the annual
percentage interest rate of 4.32% per annum and repays the loan with monthly
repayments of $1250.
After six months, the interest rate of Leanne’s loan increased to 4.44% per annum,
compounding monthly. Leanne decided to increase her payments to $1500 per month.
How much will Leanne owe on this loan after a further 12 months?

8 The details of two different home loans with principal $320 000 are shown in the table
below.

Interest Term Compounding Extra Repayment

rate period repayments
Loan 1 3.12% 20 years Monthly Allowed $1800
Loan 2 3.38% 18 years Fortnightly Not $900
allowed

Amanda is trying to decide between the two loans above. She believes that she can
afford repayments of $1900 per month.
a If no extra repayments are made, which of the two loans would be best for
Amanda? Justify your decision by explaining your mathematical reasoning.
b If Amanda could make larger repayments, does this change your decision? Justify
your answer by explaining your mathematical reasoning.

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13B Topic 2 Graphs and networks

Multiple-choice questions
1 The sum of the degrees of all the vertices in the
network opposite is:
A 6 B 7
C 8 D 15
E 16

2 The diagram shows a map of the roads between G

four towns: F, G, H and I.

H
I
A network diagram that represents the connections between towns on the map is:
A B C
G G G
F F F

I H I H I H

D F G E F G

I H I H

3 An adjacency matrix for the graph opposite could be:

[10 ]
0 0 1 0

[10 ] [10 ]
A 0 0 1 0 B C 0 0 1 0
0 0 1 0 0 0 1 0 0 0 1 0
1 2 0 1 1 0 1 3 0
0 0 0 0 0 0 0 0 0

[10 ]
D E 0 0 1 0

[10 ]
0 0 1 0
0 0 1 0 0 1 1 0
1 0 0 1 2 0
0 1 0 0 0 0

4 A connected graph with 12 edges divides a plane into four faces. The number of
vertices in this graph will be:
A 6 B 10 C 12 D 13 E 14

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5 The directed graph below shows the results of a chess competition between four
competitors, Anna, Billy, Cameron and Daria. The arc on the graph represents the
game between the people at the vertices connected by that arc. The arrow points to the
loser of the game.
Which one of the following statements about this chess competition is not true?

Billy

Anna Cameron

Daria

A Billy beat Daria.

B Daria lost more than one game.
C Anna won two of the three games she played.
D Cameron did not win any of his games.
E Nobody won all of their games.

6 The graph on the right shows six cities Birch Falls

represented by vertices and the railway Atherton
lines between those cities represented
by edges. Carter
Which one of the following walks along Fratham
the railway lines is also a trail?
Derby
A Birch Falls – Atherton – Carter –
Derby – Atherton – Carter – Eagan Eagan
B Eagan – Carter – Derby –
Eagan – Fratham
C Fratham – Brich Falls – Atherton – Carter – Birch Falls – Fratham
D Carter – Derby – Carter – Atherton – Derby
E Derby – Carter – Eagan – Derby – Carter – Atherton

7 The graph on the right is best described as: B

A bipartite
B Hamiltonian
C semi-Eulerian C
A
D Eulerian
E complete D

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8 Adding which one of the following edges to the T U

graph makes an eulerian trail possible?
A ST B SU C SX Z
S V
D XW E ZY

Y X W

9 The length of the shortest path between the P

origin, O, and destination, D, in the network 5 9
3 5 U
shown here is: O S 4
2
A 11 B 12 C 13 Q 6
1 5
D 14 E 15 3 6 T
2 7 5
4
R
10
D
10 The graph below shows towns in a particular region represented as vertices and the
roads between them represented as edges. The weight on an edge shows the travel
time, in minutes, between the vertices connected by that edge.
A salesman is about to travel from town P to town Q.
90
160
80 60
P 135 110
70 100 85
120 Q
205 120
95

The shortest time it could take him, in minutes, is:

A 400 B 405 C 410 D 420 E 440

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Short-answer questions
▶▶Simple familiar questions
1 Consider the graph on the right. B
a What is the degree of vertex C? A
b Which vertex has a loop?
C
c How many vertices in this graph have an even
degree? D
d Which vertices are immediately adjacent to E
vertex B?
F
e Which pairs of vertices have multiple edges
between them?
Q
2 Consider the directed graph shown on the right. S
a Which vertex is the only one that can be
reached from vertex P?
b Which vertex cannot be reached from any
vertex? P R
c Construct an adjacency matrix for this directed
graph.
A B C DE
3 The adjacency matrix for a graph is shown on the right. A 0 1 1 0 2
a How many edges are there between vertex A and vertex D? B 1 1 0 0 1
b How many loops are there in the graph for this adjacency C 1 0 1 1 0
matrix? D 0 0 1 0 0
c Draw the graph represented by this adjacency matrix. E 2 1 0 0 0

4 Consider the graph on the right.

a How many edges does this graph have?
b How many faces does this graph have?
c How many vertices does this graph have?
d Verify Euler’s rule for this graph.

5 The vertices of the network on the B

15
right represent camping sites within a 4
6
national park. The arcs of the network
represent the walking tracks between 3 3
each camping site and the numbers on C 7 F
these arcs show the distances along the E
A 6 5
tracks, in kilometres.
a A hiker is at campsite A. If she 12
walks to campsite F, via campsite D, 8 D
how far would she walk?
b What is the shortest distance from campsite A to campsite F?
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Extended-response questions
▶▶Complex familiar questions
1 Seven towns (A, B, C, D, E, F, G) are 19 B 20
represented by vertices on the graph to the right.
A D 56
The edges of the graph represent the road E
32
connections between the towns. The weights on 29 21
18
the edges represent the distance along the road 33
connections, in kilometres. C 28
F
a This graph is planar. Explain what this means.
25 16
b Verify that Euler’s formula for this graph. G
c An inspector or roads will begin at town B
and inspect each of the roads only once.
i Where will the inspector end this inspection?
ii What is the name given to the walk that the inspector completes through this graph?
d Each of the towns have a branch of a bank. A bank manager from the branch at
town C must visit all of the other branches in the region and then return to his own
branch at town C
i Write down one walk that the bank manager could take.
ii What is the name given to this walk?

2 The graph below shows six towns, A, B, C, D, E, F represented by vertices. The towns
are connected by roads shown as edges on the graph. The weights on the edges show
the length, in kilometres, along each section of road.
D
A 4
6 F
2
5 C 3
4
2 9
B 4
E
5
a A person can drive from E to B directly. How many kilometres will this journey be?
b How many extra kilometres is the journey from E to B via C compared to the direct
journey?
c Which towns are adjacent to town A on this graph?
d Complete the following for graphs.
i Draw a graph that shows the shortest direct distances between each of the
towns.
ii Construct the adjacency matrix for this graph.

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Complex unfamiliar questions

3 A family is visiting a theme park and will visit five rides. A map of the theme park is
shown below with the vertices representing the rides and the edges representing the
paths connecting the rides.
B

E
C

a Determine a Hamilton cycle that the family can follow.

b Make a list of any paths (edges) that the family does not follow.
c Determine an Eulerian trail that the family can follow. Explain how you determined
this trail.
The network below shows the lengths of the paths that join the rides.

B 1.6 km

2.4 km
D
4.2 km

A 3 km 2.1 km
1.8 km
3.2 km
E
C

3 km

The family decide to visit the rides by following an Eulerian trail. Assume that the
family can walk at a speed of 3 km/hr. The theme park will close at 5 p.m.
d What is the latest time that the family can enter the theme park?

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4 The diagram below shows the roads that connect the towns of Amity, Bevin and
Carter represented as edges of a network. The vertices of the network, labelled
P, Q, R, S, T, U, V and W, are checkpoints for the Amity Cycling Club road race.
The numbers on the edges of the network are the lengths, in kilometres, of the roads
between the checkpoints and the towns.
P 10 8

3 S 8 W
3 2
T 1
Amity 2 7 2 Carter
Bevin
5 3
7
6 3 V
5 5
4 U
R
5
Q
a Find, by inspection, the length of the shortest path from Amity to Bevin.
The road race covers the full length of every road on the network in any order or
direction chosen by the riders. A rider may pass through each checkpoint more than
once, but must travel along each road exactly once.
b One competitor claims this cannot be done. Explain why it is possible to travel
every road once only during this race.
c If the race begins at Amity, where must this race finish?
d One of the competitors is following this path: Amity–P–Bevin–T–S–Bevin. Which
checkpoint should not be visited next by this competitor? Explain why.
A road race for junior riders begins at Amity and ends at Carter. Participants are
allowed to take any route they prefer.
e Find the shortest path from Bevin to Carter.
f Using your answers to parts a and e, what is the shortest distance from Amity to
Carter?
The Water Authority wants to lay water mains along the roads in order to put a fire
hydrant at the locations of the checkpoints in the diagram above. A minimal spanning
tree will be used for these water mains.
g Draw the minimum spanning tree for the diagram above.
based on VCAA (2002)

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13C Topic 3 Networks and decision mathematics
Multiple-choice questions
1 The sum of the weights of the minimum spanning tree of
the weighted graph is: 6 4
7
A 2 B 30 C 32
8
D 33 E 35
5
7
3

2 Which one of the following statements Sally Kate Jon Greg

is not implied by this bipartite
graph?
A There are more translators of
French than Greek.
B Sally and Kate can translate five Spanish Italian Greek Turkish French
languages between them.
C Jon and Greg can translate four languages between them.
D Kate and Jon can translate more languages between them than can Sally and Greg.
E Sally and Jon can translate more languages between them than can Kate and Greg.

3 Five people are to be each Name A B C D E

allocated one of five tasks
Francis 12 15 99 10 14
(A, B, C, D, E). The table shows
the time, in hours, that each David 10 9 10 7 12
person takes to complete the Herman 99 10 11 6 12
tasks. The tasks must be Indira 8 8 12 9 99
completed in the least possible
Natalie 8 99 9 8 11
total amount of time. If no
person can help another, Francis
should be allocated task:
A A B B C C D D E E

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4 The capacity of the cut in the flow network 9 cut

3
shown is: 4
A 0 B 2 C 10 2
8 6
D 13 E 16 3
5 3

5 The flow network on the right 3

shows connected water pipes 1 8
5 2
represented as edges. The arrows
source 4 sink
show the direction of flow of 7 2
the water through the pipes. The 4 3
weights on the edges represent 7
the maximum flow of water, in
kilolitres per minute, through each pipe.
What is the maximum rate of flow of water that is possible from the source to the sink?
A 2 B 3 C 9 D 13 E 14

6 An activity network for a particular F

project is shown on the right. C J
Activity C is an immediate A E I
predecessor of: G K
A activity E only D Finish
B
B activity F only H
C activities E and F
D activities E, F and G
E activities E, F, G and I

Use the following information to answer questions 7, 8 and 9.

The activity network for a particular project is shown below. The duration of each
activity, in hours, is shown on the network.

A, 5 C, 4
E, 3
Start Finish
F, 2
B, 2 G, 4

D, 3

7 The earliest time that activity G can begin is:

A 4 B 5 C 9 D 11 E 13

8 What is the shortest number of days it will take to complete this project?
A 9 B 12 C 15 D 18 E 19

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9 What is the latest possible time that activity E can begin without delaying the
completion of the entire project?
A 3 B 9 C 11 D 12 E 13

10 The activity network for a particular project is shown below.

C, 4 G, 7

A, 3 F, 6 K, 2
H, 6
D, 3 M, 4
Start Finish
I, 5
B, 5 E, 2 dummy, 0
L, 8
J, 5

What is the critical path for this project?

A A–C–H–M
B A–C–G–K–M
C B – E – dummy – L – M
D B–E–F–H–M
E B–E–F–G–K–M

Short-answer questions
▶▶Simple familiar questions
1 Consider the graph shown below.
One edge can be removed from this graph in order to leave a spanning tree.
Between which pair(s) of vertices is this edge?
B
A E

C
D
F G
2 a A
 pply Prim’s algorithm to draw the minimum spanning tree for the graph below.
b What is the weight of this minimum spanning tree?
7

5 2
8
3 4 9

6 5
3

9
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3 The bipartite graph on the right shows the Person Country

countries (Zimbabwe, Portugal, Fiji, Brazil and Leah Zimbabwe
Tibet) that have been visited by five people
Sue Portugal
(Leah, Sue, Kris, Kathy and Sharon).
a How many countries has Leah visited? Kris Fiji
b Which person is the only one to have visited Kathy Brazil
Portugal?
c Each of the people will give a speech about Sharon Tibet
their travels to only one country at a travel
show. Make a list of each person and the
country about which they will speak.

4 Roy runs a catering business with four employees, Ahmet, Beryl, Cynthia and Dorian.
Each of these employees will be responsible for preparing one of the courses, canapes,
starter, main or desert, for a dinner party.
The time that each employee is expected to take to prepare each of the courses is
shown in the table below.

Canapes Starter Main Desert

Ahmet 1 2 4 4
Beryl 5 3 5 3
Cynthia 3 3 3 2
Dario 6 4 4 7

a Which one of the employees is the quickest to prepare Canapes?

b Apply the Hungarian algorithm to determine the allocation of employee to course
so that the total time taken to prepare the dinner is as small as possible.
c How long will Roy and his employees take to prepare the dinner if:
i the courses are prepared one after the other?
ii preparation of all courses starts at the same time?

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5 In the flow network on the right, the cut A cut B
arcs represent pipes through which 2
4
water can flow. The numbers on the 9
3 3
arcs show the maximum rate at 5
sink
which water can flow through each source 3
6 3 4
pipe, in kilolitres per minute. Two
cuts are shown on this network. 8 2
a Calculate the capacity of:
5
i cut A ii cut B
b The maximum rate at which water can flow from the source to the sink is
8 kilolitres per minute. Draw the cut with this minimum capacity on the network.

6 An activity network for a particular project is shown below.

D
A
E
B H
Start Finish
C F
I
G

a How many activities are required by this project?

b How many immediate predecessors does activity H have?
c Write down the activities for which activity C is an immediate predecessor.

7 A precedence table for a project is shown below.

Activity Immediate Duration

predecessors (hours)
A − 3
B A 2
C A 5
D B 2
E C 3
F E 6
G D, F 2

a Draw an activity network for this project.

b Perform the forward scanning process and determine the shortest time in which this
project could be completed.

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8 The activity network for a project is shown below. All durations in this network are in hours.

3 3 6 6 11 11

A, 3 C, 3 G, 5
J, 4 15 15
0 0 7 8 H, 7 L, 2
Start Finish
D, 4 I, 3 K, 4 17 17
B, 5 E, 2
F, 6
5 6 11 13
The forward scanning and backward scanning processes have already been completed.
a How many hours should it take for this project to be completed?
b What is the earliest starting time for activity H?
c Calculate the float time for activity E.
d Write down the critical path for this project.

9 The activity network for a particular project is shown below. All durations in this
network are in days.
B, 5

A, 4 F, 8
E, 7
C, 6 G, 2
Start Finish
D, 9 I, 5 J, 3
H, 4

a Construct a precedence table for this project.

b Complete the forward scanning process to determine the shortest time in which this
project can be completed.
c Complete the backward scanning process to determine the critical path for this
project.

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Extended-response questions
▶▶Complex familiar questions
1 A number of towns need to be linked by M
38 N
pipelines to a natural gas supply. In the 51 31 40
network shown, the existing road links
43 72
between towns L, M, N, O, P, Q and R and L S
24
35 R 50 65
to the supply point, S, are shown as edges.
The towns and the gas supply are shown as O
47
57 63
vertices. The distances along roads are P
given in kilometres. 55
a What is the shortest distance along roads Q
from the gas supply point S to the town O?
b The gas company decides to run the gas lines along the existing roads. To ensure
that all nodes on the network are linked, the company does not need to place pipes
along all the roads in the network.
i What is the usual name given to the network within a graph (here, the road system)
which links all nodes (towns and supply) and which gives the shortest total length?
ii Sketch this network.
iii What is the minimum length of gas pipeline the company can use to supply all
the towns by running the pipes along the existing roads?

2 Margaret has four grandchildren, Tyson, Emma, Gregory and Rose. Margaret has four
chocolate bars (Flakey, Cherry Chomp, Honey Crunch and Snacker) and will give one
to each of her grandchildren.
••
Tyson likes Flakey and Snacker
••
Emma only likes Flakey
••
Gregory likes all of the chocolates
••
Rose likes every chocolate except Cherry Chomp
a Draw a bipartite graph with the grandchildren on the left and the chocolate bars on
the right.
b Which grandchild will receive the Snacker?
c How will Margaret distribute the chocolate bars so that every grandchild receives
one they like?

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3 Camp sites A, B, C and D are to be supplied

Camp site W X Y Z
with food. Four local residents, W, X, Y and Z,
offer to supply one campsite each. The cost in A 30 70 60 20
dollars of supplying one load of food from each B 40 30 50 80
resident to each campsite is tabulated. C 50 40 60 50
a Find the two possible matchings between
D 60 70 30 70
campsites and residents so that the total cost
is a minimum.
b State this minimum cost.

4 A reservoir at E pumps water through pipes along the flow network shown below.
B
5
5
A D 8
2 E
4
6 5
4
6
C
F
2 3
G

The capacity of each pipe, in megalitres per day, is shown as weights on the arcs in the
network.
a What is the maximum flow of water that can reach the sink at A from the
source at E?
b How many litres of water will flow into the sink over a three-day period?

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5 A particular project requires 11 individual activities to complete.
The activity network below shows these activities represented as arcs and the durations
of the activities represented as weights on those arcs. Some of the activity durations
are missing.
G, 4

E, 4 dummy, 0 J, 3
A, 6 F, 6 I, K, 12
Start Finish
C, 2 H, 3
B,

D, 4

a Explain what the dummy activity indicates for this project.

b Complete the table of values below.

Activity Duration EST LFT LST Float

(days)
A 6 0 7 1 1
B 0 5 0 0
C 2 5 7 5
D 4 5 13 9 4
E 4 11 7 0
F 6 7 16 10 3
G 4 11 15 0
H 3 9 16 13
I 13 18 16 3
J 3 15 18 15 0
K 12 18 30 18 0

c What is the critical path for this activity?

d Explain what the critical path means for this entire project.

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▶▶Complex unfamiliar questions

Revision

6 Water pipes of different capacities are connected to two water sources and two sinks.
The network of water pipes is shown in the diagram below. The numbers on the edges
represent the capacities, in kilolitres per minute, of the pipes.

13 6
4
source 1 sink 1
15 2
12
7
9
14 3
source 2
14
1 sink 2
8 6

Find the maximum flow, in kilolitres per minute, to each of the sinks in this network.

7 Storm water enters a network of pipes at either Dunlop North (Source 1) or Dunlop
South (Source 2) and flows into the ocean at either Outlet 1 or Outlet 2.
On the network diagram below, the pipes are represented by straight lines with arrows
that indicate the direction of the flow of water. Water cannot flow through a pipe in the
opposite direction.
The numbers next to the arrows represent the maximum rate, in kilolitres per minute,
at which storm water can flow through each pipe.
Source 1
Dunlop North 400
300
800 300 100 Outlet 1
400
200
Source 2 200
100 ocean
200
Dunlop South 300 300500 400
300 600
100 Outlet 2
100 300

Determine the maximum rate, in kilolitres per minute, at which water can flow from
these pipes into the ocean at Outlet 1 and Outlet 2.
©VCAA (Further Maths, 2, 2011)

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 13C Topic 3 Networks and decision mathematics 541  

Revision
8 The activity network for a project is shown in the diagram below. The duration for
each activity is in hours.

E, 4 dummy, 0
A, 6 F, 6 I, 2
start finish

B, 5 C, 2

a Determine the shortest time in which this project can be completed.

b Write down the critical path for this project.
c The time it takes to complete activity A can be reduced by one hour at a cost of $50.
Explain why this will not affect the completion time of this project.

Activity B can be reduced in time at a cost of $100 per hour. Activity F can be reduced
in time at a cost of $50 per hour.
d What is the cost of reducing the completion time of this project as much as
possible?
based on VCAA (2004)

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 542 Chapter 13 ■ Revision of Unit 4 Chapters 7–12
Revision

13D List of Unit 4 and Units 3 & 4 assessment and

examination practice online items
These assessment practice items can be found in the interactive textbook and in the teacher
resources of the online teaching suite.

Interactive Textbook
For student and teacher access:

1 IA3: A practice internal examination on Unit 4

2 EA: a practice external examination on Units 3&4

Online Teaching Suite

For teacher access:

1 IA3: An internal examination on Unit 4

2 EA: a practice external examination on Units 3&4

Assessment items for Unit 3 are listed at the end of Chapter 6.

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 Glossary
Glossary

A → C
tn+1 = tn + d and a starting point usually t1.
A Arithmetic sequences are used to model linear
Activity (CPA) [p. 473] A task to be completed as growth and linear decay situations. The rule
part of a project. Activities are represented by the for the nth term of an arithmetic sequence is:
edges in the project diagram. tn = t1 + (n − 1)d = a + (n − 1)d, where a = t1 is
the starting value.
Activity network [p. 473] An activity network is
a weighted directed graph that shows the required
order of completion of the activities that make up
a project. The weights indicate the durations of the
B
activities they represent. Backward scanning [p. 485] Backward scanning
is the process of determining the LST for each
Adjacency matrix [p. 399] A square matrix activity in a project activity network.
showing the number of edges joining each pair of
vertices in a graph. Balance [p. 324] The balance of a loan or
investment is the amount owed or accrued after a
Algorithm [p. 441] A step-by-step procedure period of time.
for solving a particular problem that involves
applying the same process repeatedly. Examples Bipartite graph [p. 446] A graph whose set of
include Prim’s algorithm and the Hungarian vertices can be split into two subsets, X and Y,
algorithm. in such a way that each edge of the graph joins a
vertex in X and a vertex in Y.
Allocation [p. 451] Allocation is the process
of assigning a series of tasks to different Bivariate data [p. 2] Data in which each
members of a group in a way that enables the observation involves recording information about
tasks to be completed for the minimum time or two variables for the same person or thing. An
cost. example would be data recording the height and
weight of the children in a preschool.
Annuity [p. 351] An annuity is a compound
interest investment from which regular payments Bridge [p. 394] An edge in a connected graph
are made. that, if removed, would leave the graph no longer
connected.
Arc [p. 219] The part of a circle between two
given points on the circle. The length of the arc
of a circle is given by s = r
(180)
θ
π, where r C
Capacities (flow network) [p. 455] The weights
is the radius of the circle and θ is the angle in
of the directed edges in a flow network are called
degrees subtended by the arc at the centre of the
capacities. They give the maximum amount
circle.
that can move between the two points in the
Arithmetic sequences [p. 166] A sequence is flow network represented by these vertices in a
arithmetic if it satisfies the recurrence relation: particular time interval. This could be, for example,

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 544 Glossary
D → E

the maximum amount of water in litres per minute group, such as tasks. The cost can be money, or
or the maximum number of cars per hour. other factors such as the time taken to complete the
Categorical variable [p. 2] A variable used to project.
represent characteristics of individuals, for example Critical path [p. 483] The project path that has
place of birth, house number. Categorical variables the longest completion time.
Glossary

come in types, nominal and ordinal. Critical path analysis [p. 483] A project
Causal relationship [p. 84] When a change in planning method in which activity durations are
the explanatory variable leads to a change in known with certainty.
the response variable, this is known as a causal Cut [p. 457] A line dividing a directed (flow)
relationship. graph into two parts in a way that separates all
Centring [p. 124] If smoothing takes place over ‘sinks’ from their ‘sources’.
an even number of data values, the smoothed values Cut capacity [p. 457] The capacity of a cut is
do not align with an original data value. A second the sum of the capacities of the cuts passing
stage of smoothing is carried out to centre the through the cut that represents flow from the source
smoothed values at an original data value. to the sink. Edges that represent flow from the sink
Coefficient of determination (R2) [p. 45] to the source do not contribute to the capacity of
A coefficient which gives a measure of the the cut.
predictive power of a regression line. It gives Cycle (graphs) [p. 413] A walk with no repeated
the percentage of variation in the RV that can be vertices that starts and ends at the same vertex. See
explained by the variation in the EV. also circuit.
Complete graph [p. 394] A graph with edges Cycle (time series) [p. 115] Periodic movement
connecting all pairs of vertices. in a time series but over a period greater than
Compound interest [p. 199] Where the interest a year.
paid on a loan or investment is added to the
principal and subsequent interest is calculated on
the total.
D
Compounding period [p. 290]
Degree of a vertex (deg(A)) [p. 391] The
The compounding period is the time period for the
number of edges attached to the vertex. The degree
calculation of interest for an investment or loan.
of vertex A is written as deg(A).
Typical compounding periods are yearly, quarterly,
monthly or daily. Deseasonalise [p. 130] The process of removing
seasonality in time series data.
Connected graph [p. 394] A connected graph
is a graph that has no isolated vertices and no Directed graph (digraph) [p. 395] A graph or
separate parts. network in which directions are associated with
each of the edges.
Continuous variable [p. 3] A variable
representing a quantity that is measured rather Discrete variable [p. 3] A variable representing
than counted, for example the weights of people in a quantity that is determined by counting, for
kilograms. example, the number of people waiting in a queue.

Coordinated Universal Time (UTC) [p. 241] A Dummy activity [p. 477] An artificial activity of
measure of time used to regulate time across the zero time duration added to a project diagram to
world. Equivalent to GMT. ensure that all predecessor activities are properly
accounted for.
Correlation coefficient r [p. 36] A statistical
measure of the strength of the linear association
between two numerical variables.
Cost matrix [p. 448] A cost matrix is a table that E
contains the cost of allocating objects from one Earliest starting time (EST) [p. 484] The earliest
group, such as people, to objects from another time an activity in a project can be started.

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 Glossary 545  

Glossary
Edge [p. 391] A line joining one vertex in a Flow network [p. 455] A flow network occurs
graph or network to another vertex or itself where the directed edges of the graph represent the
(a loop). flow of material from one vertex to another. The
Effective annual rate of interest [p. 303] Used weight of an edge of a flow network is called the
to compare the interest paid on loans (or capacity of that edge.
investments) with the same annual nominal interest Forward scanning [p. 484] Forward scanning
rate r but with different compounding periods is the process of determining the EST for each
(daily, monthly, quarterly, annually, other). activity in a project activity network.

F → H
Elements [p. 450] The numbers or symbols
displayed in a matrix.
Equivalent graph [p. 405] see isomorphic G
graphs. Geometric decay [p. 188] When a recurrence
Eulerian trail [p. 416] A walk in a graph or rule involves multiplying by a factor less than
network that includes every edge just once (but one, the terms in the resulting sequence are said to
does not start and finish at the same vertex). decay geometrically.
To have an eulerian walk (but not an eulerian Geometric growth [p. 188] When a recurrence
circuit), a network must be connected and have rule involves multiplying by a factor greater than
exactly two vertices of odd degree, with the one, the terms in the resulting sequence are said to
remaining vertices having even degree. grow geometrically.
Euler’s formula [p. 407] The formula Geometric sequences [p. 187] A sequence is
v − e + f = 2 , which relates the number of geometric if it satisfies the recurrence relation:
vertices, edges and faces in a connected graph. tn+1 = r × tn and a starting point usually t1.
Explanatory variable [p. 4] When investigating Geometric sequences are used to model geometric
associations in bivariate data, the explanatory growth and linear decay situations. The rule
variable (EV) is the variable used to explain or for the nth term of a geometric sequence is
predict the value of the response variable (RV). tn = rn−1t1 = rn−1a, where a = t1 is the starting
value.
Extrapolation [p. 75] Using a mathematical
model to make a prediction outside the range of Graph or network [pp. 391, 500] A collection of
data used to construct the model. points called vertices and a set of connecting lines
called edges.
Great circle [p. 223] A circle on a sphere whose
F plane passes through the centre of the sphere. The
shortest distance between two points on a sphere is
Face [p. 406] An area in a graph or network that
along an arc of the great circle passing through the
can only be reached by crossing an edge. One such
two points. See also small circle.
area is always the area surrounding a graph.
Greenwich Mean Time (GMT) [p. 241]
Flat-rate depreciation [p. 180] Depreciation
Equivalent to UTC, this is a measure of time
where the value of an item is reduced by the
centred around Greenwich, England and is used
same amount each year. Flat-rate depreciation is
across the world.
equivalent, but opposite, to simple interest.
Float (slack) time [p. 483] The amount of time
available to complete a particular activity that does
not increase the total time taken to complete the H
project. Hamiltonian cycle [p. 420] A hamiltonian path
Flow [p. 455] Flow is the transfer of material, that starts and finishes at the same vertex.
such as water, gas or traffic through a directed Hamiltonian graph [p. 420] A Hamiltonian
network. graph is a graph that contains a Hamiltonian cycle.

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 546 Glossary
I → M

Hamiltonian path [p. 420] A path through a Least squares method [p. 56] One way
graph or network that passes through each vertex of finding the equation of a regression line.
exactly once. It may or may not start and finish at It minimises the sum of the squares of the
the same vertex. residuals. It works best when there are no
Hungarian algorithm [p. 448] An algorithm for outliers.
Glossary

solving allocation (assignment) problems. Linear decay [p. 169] When a recurrence
rule involves subtracting a fixed amount, the
terms in the resulting sequence are said to decay
I linearly.
Linear growth [p. 169] When a recurrence rule
Immediate predecessor [p. 473] An activity that
involves adding a fixed amount, the terms in the
must be completed immediately before another one
resulting sequence are said to grow linearly.
can start.
Linear regression [p. 58] The process of fitting a
Intercept (of a straight line) [p. 60] Where the
straight line to bivariate data.
regression line cuts across the y-axis.
Longitude [p. 224] The angle or angular distance
Interest [p. 178] The amount of money paid
east or west of the prime meridian.
(earned) for borrowing (lending) money over a
period of time. Loop [p. 391] An edge in a graph or network that
joins a vertex to itself.
Interest rate [p. 115] The rate at which interest is
charged or paid. Usually expressed as a percentage
of the money owed or lent.
International Date Line [p. 242] An imaginary M
line through the Pacific Ocean that corresponds to
Matrix [p. 399] A rectangular array of numbers or
180° longitude.
symbols set out in rows and columns within square
Interpolation [p. 75] Using a regression line to brackets (pl: matrices).
make a prediction within the range of values of the
Maximum flow (graph) [p. 455] The capacity of
explanatory variable.
the ‘minimum’ cut.
Irregular (random) fluctuations [p. 117]
Mean (x– ) [p. 60] The balance point of a data
Unpredictable fluctuations in a time series. Always
∑x
present in any real world time series plot. distribution. The mean is given by x = , where
n
Isolated vertex [p. 393] A vertex that is not ∑ x is the sum of the data values and n is the
connected to any other vertex. Its degree is zero. number of data values. Best used for symmetric
distributions.
Isomorphic graphs [p. 405] Equivalent graphs.
Graphs that have the same number of edges and Median [p. 89] The median (M) is the middle
vertices that are identically connected. value in a data distribution. It is the midpoint of a
distribution dividing an ordered data set into two
equal parts. Can be used for skewed or symmetric

L distributions.
Meridian [p. 224] Semi-great circles that pass
Latest start time (LST) [p. 487] The latest through north and south poles.
time an activity in a project can begin, without
affecting the overall completion time for the Meridians of longitude [p. 224] Semi-great
project. circles which pass through the north and south poles.

Latitude [p. 224] The angle or angular distance Minimum cut (graph) [p. 458] The cut through a
north or south of the equator. graph or network with the minimum capacity.

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 Glossary 547  

Glossary
Minimum spanning tree [p. 441] The spanning Percentage frequency [p. 11] Frequency
tree of minimum length. For a given connected expressed as a percentage.
graph, there may be more than one minimum Perpetuity [p. 376] An investment where
spanning tree. an equal amount is paid out on a regular basis
Modelling [pp. 198, 285] Mathematical forever.
modelling is the use of a mathematical rule or Planar graph [p. 405] A graph that can be drawn
formula to represent real-life situations. in such a way that no two edges intersect, except at
Moving mean smoothing [p. 121] In three- the vertices.

N → R
moving mean smoothing, each original data value Precedence table [p. 474] A table that records the
is replaced by the mean of itself and the value on activities of a project, their immediate predecessors
either side. In five-moving mean smoothing, each and often the duration of each activity.
original data value is replaced by the mean of itself
and the two values on either side. Prim’s algorithm [p. 441] An algorithm for
determining a minimum spanning tree in a
Multiple edge [p. 393] Where more than one connected graph.
edge connects the same two vertices in a graph.
Prime meridian [p. 225] The meridian located at
0° which passes through Greenwich, England.

N Principal (P) [p. 178] The initial amount

borrowed, lent or invested.
Network [pp. 424, 526] A set of points called
vertices and connecting lines called edges,
enclosing and surrounded by areas called faces.
Nominal interest rate [p. 290] The annual
R
Radius [p. 219] The distance from the centre
interest rate for a loan or investment that
to any point on the circle (sphere). Half the
assumes the compounding period is 1 year. If
diameter.
the compounding period is less than a year, for
example monthly, the actual or effective interest Recurrence relation [pp. 167, 281] A relation
rate will be greater than r. that enables the value of the next term in a
sequence to be obtained by one or more current
Numerical variable [p. 2] A variable used to
terms. Examples include ‘to find the next term,
represent quantities that are counted or measured.
add two to the current term’ and ‘to find the next
For example, the number of people in a queue, the
term, multiply the current term by three and
heights of these people in cm. Numerical variables
subtract five’.
come in types: discrete and continuous.
Reducing-balance depreciation [p. 201] When
the value of an item is reduced by the same
O percentage each year. Reducing-balance
depreciation is equivalent to, but opposite to,
Outliers [pp. 26, 117] Data values that appear to compound interest.
stand out from the main body of a data set.
Reducing-balance loan [p. 324] A loan that
attracts compound interest, but where regular

P repayments are also made. In most instances the

repayments are calculated so that the amount of
Parallels of latitude [p. 224] Small circles whose the loan and the interest are eventually repaid
planes are parallel to that of the equator. in full.
Path [p. 412] A walk with no repeated vertices. Reseasonalise [p. 130] The process of converting
See also trail. seasonal data back into its original form.

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 548 Glossary
S → T

Residual [p. 59] The vertical distance from a Sink and source [p. 455] In a flow network, a
data point to a straight line fitted to a scatterplot is source generates flow while a sink absorbs the flow.
called a residual: Slope (of a straight line) [p. 60] The slope of a
residual = actual value − predicted value rise
straight line is defined to be: slope = .
Residuals are sometimes called errors of run
Glossary

prediction. The slope is also known as the gradient.

Residual plot [p. 68] A plot of the residuals Small circle [p. 223] Any circle on a sphere
against the explanatory variable. Residual whose plane does not pass through the centre of the
plots can be used to investigate the linearity sphere. See also great circle.
assumption. Smoothing [p. 121] A technique used to
Response variable [p. 4] The variable of primary eliminate some of the variation in a time series plot
interest in a statistical investigation. so that features such as seasonality or trend are
more easily identified.
Source [p. 455] See sink and source.

S Spanning tree [p. 439] A subgraph of a

connected graph that contains all the vertices of
Scatterplot [p. 20] A statistical graph used for the original graph, but without any multiple edges,
displaying bivariate data. Data pairs are represented circuits or loops.
by points on a coordinate plane, the EV is plotted
on the horizontal axis and the RV is plotted on the Standard deviation (s) [p. 60] A summary
vertical axis. statistic that measures the spread of the data values
around the mean. The standard deviation is given
Seasonal indices [p. 130] Indices calculated
(x − x) 2
when the data shows seasonal variation. Seasonal by s = √ ∑
indices quantify seasonal variation. A seasonal n−1
index is defined by the formula: Strength of a linear relationship [p. 36]
value for season Classified as weak, moderate or strong. Determined
seasonal index =
seasonal average by observing the degree of scatter in a scatterplot
For seasonal indices, the average is 1 (or 100%). or calculating a correlation coefficient.

Seasonality [p. 115] The tendency for values Structural change (time series) [p. 116]
in the time series to follow a seasonal pattern, A sudden change in the established pattern of a
increasing or decreasing predictably according to time series plot.
time periods such as time of day, day of the week, Subgraph [p. 395] Part of a graph that is also a
month, or quarter. graph in its own right.
Sequence [p. 163] A list of numbers or
symbols written down in succession, for example
5, 15, 25, . . .
T
Time series data [p. 107] A collection of data
Shortest path [p. 424] The path through a graph values along with the times (in order) at which they
or network with minimum length. were recorded.
Simple graph [p. 394] A graph with no loops or Time series plot [p. 107] A line graph where the
multiple edges. values of the response variable are plotted in time
Simple interest [pp. 178, 285] Interest that is order.
calculated for an agreed period and paid only on Time zone [p. 241] A region of the Earth that has
the original amount invested or borrowed. a uniform standard time or local time. There are 24
Sink [p. 455] See sink and source. time zones in total.

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 Glossary 549  

Glossary
Trail [p. 412] A walk with no repeated edges. For example, a machine filling bottles of drink
See also path. may be depreciated by 0.001 cents per bottle
it fills.
Tree [p. 439] A connected graph with no circuits,
multiple edges or loops.
Trend [p. 113] The tendency for values in the
time series to generally increase or decrease over a
V
significant period of time. Variable [p. 2] A symbol used to represent a
number or group of numbers.

U → W
Trend line forecasting [p. 143] Using a line
fitted to an increasing or decreasing time series to Vertex (graph) [p. 391] The points in a graph or
predict future values. network (pl vertices).
Two-way frequency table [p. 8] A frequency
table in which subjects are classified according
to two categorical variables. Two-way frequency W
tables are commonly used to investigate the Walk [p. 411] Any continuous sequence of edges,
associations between two categorical variables. linking successive vertices, that connects two
different vertices in a graph. See also trail and
path.
U Weighted graph [p. 424] A graph in which a
Unit-cost depreciation [p. 180] Depreciation number representing the size of some quantity
based on how many units have been produced is associated with each edge. These numbers are
or consumed by the object being depreciated. called weights.

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1A → 1B

Answers
Answers

Chapter 1 Exercise 1B
1 a S ex is the EV, intention to go to university is
Exercise 1A
the RV.
1 a Categorical b Categorical b
Sex
c Numerical d Numerical
e Categorical f Numerical F M Total
g Numerical h Categorical
Intend to go to No 4 4 8
i Categorical
university
2 a Two categorical variables Yes 8 4 12
b One categorical and one numerical Total 12 8 20
c Two numerical
d Two categorical 2 a Age group is the EV, reduce fees is the RV.
3 a EV: colour; RV: toxicity b
Age group
b EV: type of diet; RV: weight loss
c EV: age; RV: price Reduce 17–18 19–25 26 or Total
d EV: fuel; RV: cost fees more
e EV: location; RV: house price No 3 3 4 10
4 a Age
b Years of education Yes 8 6 6 20
c Temperature Total 11 9 10 30
d Time of year
e Age group c
Age group
f State of residence
5 a Sex – categorical, EV; attitude to lowering Reduce 17–18 18–25 26 or
the drinking age – categorical, RV fees more
b Hours of study – numerical; hours spent
No 27.3% 33.3% 40.0%
using social media – numerical. Either
­variable could be the EV or RV, it would Yes 72.7% 66.7% 60.0%
depend on the question asked.
Total 100.0% 100.0% 100.0%
c Gestation time – numerical, EV; birth
weight – numerical, RV 3 a E  nrolment status
d Sex – categorical, EV; hours spent using b No. The percentage of full-time and
social media – numerical, RV ­part-time students who drank alcohol is
e Voting preference – categorical, support for similar: 80.5% to 81.8%. This indicates
tax cuts – categorical. Either variable could that drinking behaviour is not related to
be the EV or RV, it would depend on the ­enrolment status.
question asked.

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 Answers 551  

Answers
4 a S ex is the EV, are you satisfied with your 7 a S atisfaction with job is the EV, satisfaction
life overall? is the RV. with life is the RV.
b
Sex of respondent Satisfaction with job
Are you satisfied Female Male Satisfaction Dissatisfied Satisfied
with your life with life
overall?
Dissatisfied 75.0% 22.6%
Yes 86.4% 84.7%
Satisfied 25.0% 77.4%

1B  
No 13.6% 15.3%
Total 100.0% 100.0%
Total 100.0% 100.0%
b The data supports the contention that those
There is no association between satisfaction people who are satisfied with their jobs are
with life overall and the sex of the more likely to be satisfied with their lives.
­respondent. Very similar percentages of Of those people who are satisfied with their
males and females report that they are job, 77.4% were satisfied with life, while
satisfied with their life overall (Females: a much lower percentage 25.0% of people
86.4%, Males: 84.7%). who were dissatisfied with their job were
5 a Handedness satisfied with their lives.
b 8 Class is the EV, exam grade is the RV.
Sex
Class
Handedness Male Female
Exam grade Dr Evans Dr Smith
Left 9.0% 9.8%
Fail 11.1% 9.4%
Right 91.0% 90.2%
Pass 61.1% 62.5%
Total 100.0% 100.0%
Credit or above 27.8% 28.1%
c No, there is little difference in the
percentage of males and females who are Total 100.0% 100.0%
left handed, 9.0% compared to 9.8%.
The data does not support the suggestion that
6 a Sex
Dr Evans’s maths class achieves higher grades
b 54.9%
than Dr Smith’s maths class. Both classes
c There are several ways you can answer the
achieved similar percentages in each group
question.
at all exam grade levels, with 61.1% of Dr
Focusing on the category ‘rarely’.
Evans’s class achieving a pass, which is very
Yes; the percentage of males who rarely
close to the 62.5% who achieved a pass in Dr
exercised (28.8%) was significantly less
Smith’s class.
than the percentage of females who rarely
9 Type of treatment is the EV, outcome of
exercised (39.2%).
­treatment is the RV.
or
Yes; the percentage of males who exercised Type of treatment
regularly (18.6%) was significantly higher Outcome of Drug Pillow
than the percentage of females who treatment
exercised regularly (5.9%).
Note: For the category ‘sometimes’, there Complete cure 9.8% 31.3%
is no association between level of exercise Partial cure 26.8% 37.5%
and sex.
No improvement 63.4% 31.3%
Total 100.0% 100.0%

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 552 Answers
1B → 1D

The data supports the contention that the
5 45
special pillow would be more effective in the
treatment of snoring than the treatment with
drugs. A much higher percentage of those 30

Runs
using the pillow experienced a complete cure
compared to those using the drug treatment
15
(31.3% compared to only 9.8%).
Answers

0
Exercise 1C
5 10 15 20 25 30 35 40 45 50 55 60 65
1 a Number of seats b Numerical
Balls
c 8 aircraft d Around 800 km/h
6 2.30
2
38
37 2.25
Maximum temperature°C

36
35

Diameter (cm)
34 2.20
33
32
31 2.15
30
29
2.10
28
27
26 2.02
16 17 18 19 20 21 22 23 24 25 26 27
Minimum temperature°C
3 a Age is the EV and price is the RV. 0 40 80 120 160
b Temperature (°C)
12000
7
10000 135
8000
Price ($)

120
Number

6000

4000
105
2000

0 90
0 2 4 6 8 10 12
Age (years)
0 4 8 12 16 20 24
4 a A
 dvertising is the EV and volume of Time (mins)
business is the RV.
b
50000 Exercise 1D
Volume of business ($)

40000 1 Note: There are no absolute right or wrong

answers to these questions as answering them
30000
requires a degree of personal judgement.
20000 a No association b Yes, positive
10000 c Yes, positive d Yes, positive
e Yes, negative f Yes, negative
0 2 a, b, c i Positive, linear, moderate
0 2000 4000 6000 8000
ii Negative, linear, weak
Advertising ($)
iii Positive, linear, strong
iv No association

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Answers
3 a Positive b Linear Exercise 1F
c Hard to classify with so little data
1 a 45.6% b 11.9%
4 a Positive b Linear c Strong
c 32.1% d 45.3%
5 a Negative b Linear c Strong
e 1.5%
6 a
35 2 a r = 0.906 b r = −0.353
3 a The coefficient of determination is
30 r2 = (−0.611) 2 = 0.373 or 37.3%; that is,
37.3% of the variation observed in hearing
Wife’s age

1D → 1 review
25 test scores can be explained by variation
in age.
20 b The coefficient of determination is
r2 = (0.716) 2 = 0.513 or 51.3%; that is,
15
51.3% of the variation observed in mortality
15 20 25 30 35 40 45
Husband’s age
rates can be explained by variation in
smoking rates.
b Positive, with an outlier at (25, 35)
c The coefficient of determination is
c Linear d Moderate
r2 = (−0.807) 2 = 0.651 or 65.1%; that
7 a
100 is, 65.1% of the variation observed in life
expectancies can be explained by variation
90 in birth rates.
d The coefficient of determination is
Weight (kg)

80
r2 = (0.818) 2 = 0.669 or 66.9%; that
70 is, 66.9% of the variation observed in
60
daily maximum temperature is explained
by the variability in daily minimum
50 temperatures.
160 165 170 175 180 185 190 e The coefficient of determination is
Height (cm)
r2 = (0.8782) 2 = 0.771 or 77.1%; that is,
b Positive, with an outlier at (160, 75) 77.1% of the variation in the runs scored by
c Linear, although it’s hard to tell with no data a batsman is explained by the variability in
in the range 160–175 cm. the number of balls they face.
d Moderate 4 a R2 = 36%, thus 36% of variation in
the weekly expenditure on food can be
Exercise 1E explained by the variation in income.
1 a A : strong, positive, non-linear relationship b R2 = 25%, thus 25% of variation in the
with no outliers weekly expenditure on leisure can be
B: strong, negative, linear relationship with explained by the variation in income.
an outlier c People’s incomes are associated with their
C: weak, negative, linear relationship with expenditure on both leisure and food,
no outliers but it is more powerful in explanation of
b A: non-linear B: outlier expenditure on food.
2 0.5477 3 0.7475
4 0.2869 5 0.73 Chapter 1 review
6 0.972
7 a–c Answers given in question. Multiple-choice questions
8 a −0.889 b Strong 1 A 2 D 3 B 4 D 5 C
9 a 0.607 b Moderate 6 B 7 D 8 E 9 C 10 C
10 a 0.482 b Weak 11 C 12 D 13 A

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 554 Answers
1 review

Short-answer questions 11 a R2 = 59.3%

1 a    Two categorical b 59.3% of the variation in hearing test scores
b One categorical and one numerical in explained by the variation in age
c Two numerical 12 a There is a moderate, positive, linear rela-
2 a    EV: sex, RV: belief in Astrology tionship between hours of sunlight and height
b EV: Sex, RV: weight of the seedlings. Those seedlings which get
Answers

c EV: hrs in paid employment, RV: exam mark more sunlight tend to be taller. There is one
3 Both variables are categorical, EV; Sex plant (4.8, 11.5) which is a possible outlier -
is labelling columns, RV: Intend to go to this plant seems to be taller that would be
­university is labelling rows. ­indicated by the number of hours of sunlight.
4 b The value of r will be closer to 1, indicating
Intend Male Female a stronger correlation.
going to
university?
Extended-response questions
1 a 
Number of accidents and age; both
Yes 67% 77%
categorical variables
No 33% 23% b RV: Number of accidents; EV: age
c 470
Total 100% 100%
d
5 In this sample of 300 year 12 students we see Number of Age < 30 Age ⩾ 30
than females are more likely to intend to go to accidents
university than males (77% of females, 67% At most one 21.7% 42.5%
of males). accident
6
240 More than one 78.3% 57.5%
accident
220
e The statement is correct. Of drivers aged
less than 30, 78.3% had more than one
Icecreams

200 accident compared to only 57.5% of drivers

in the older category.
180
2 a
19
160
18.5
140 18
20 25 30 35 40 45
Rate ($/h)

Temperature 17.5
17
7 a r = 0.984 b strong 16.5
8 a    There is a moderate, negative, linear 16
­relationship between government
15.5
expenditure on health and infant mortality. 0 2 4 6 8 10 12 14
Those countries which spend more on health Experience (years)
tend to have lower infant mortality dates.
‘Rate’ is the response variable.
There is one country (14, 36) which is a
b There is a strong, positive, linear ­relationship;
possible outlier - this country seems to have
that is, people with more experience are gen-
a higher infant mortality than is indicated by
erally being paid a higher starting pay rate.
the health expenditure.
There are no apparent outliers. r ≈ + 0.9.
b Yes, because both variables are numerical,
c 0.967
and relationship is linear
d Coefficient of determination = 0.934;
9 r=1
that is, 93.4% of variation in pay rate is
10 covariance = 4.328
explained by the variation in experience.

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Answers
3 a 
11.9% 6 a RV: distance travelled; EV: age
b 52.3% b distance travelled = 16 + 11 × age
c Marital status 7 a r is also negative.
d Yes. There are several ways that this can b Slope is zero: regression line is horizontal.
be seen. For example, by comparing the c Intercept = y (mean of RV)
married and widowed groups, we can see   8–9 Answers given in question.
that a smaller percentage of those wid- 10 a Answer given in question.
owed found life exciting (33.8%) com- b runs = −2.6 + 0.73 × balls faced
11 a

1 review → 2B
pared to those who were married (47.6%). RV: number of TVs
Or: a bigger percentage of widowed people b Answer given in question.
found life pretty routine (54.3% to 48.7%) c number of TVs =
and dull (11.9% to 3.7%) compared to 61.2 + 0.930 × number of cars
those who were married.
4 a 
Time taken is EV, number of mistakes is RV.
b
Exercise 2B
1 mark = 80 − 4.3 × days absent
6 2 A: clear curved pattern in the residuals (not
Number of mistakes

random)
4 C: clear curved pattern in the residuals (not
random)
2 3 a height b 0.33, 2.9
c 55.7 d 2.8
0 4 a fuel consumption b 0.01, − 0.1
35 40 45 50 55 60 65 c 9.7 d −0.8
Time taken (mins)
5 a 14.7, 27.8 b 14.7
There is a moderate, negative, linear c 0.87 d 75.7, fat content
relationship between time taken and the e i 145.4
number of mistakes – those who take longer ii −13.4
tend to make fewer mistakes. 6 a  −0.278: the slope predicts that success rate
c Yes, because both variables are numerical, decreases by 27.8% for each additional
and the relationship is linear. metre the golfer is from the hole.
d −0.635 b 73.5 c 3.54 m d −0.705
e 40.3% of the variation in the number of e 49.7%: 49.7% of the variation in success
mistakes made can be explained by the rate in putting is explained by the variation
variation in time taken. in the distance the golfer is from the hole.
7 a Yes, linear relationship
b 0.9351 or 93.5%
Chapter 2 c 93.5%
d pay rate = 8.56 + 0.289 × experience
Exercise 2A e The pay rate for a worker with no
experience
1 A residual is the difference between a data value
f On average, the pay rate increases by 29
and its value predicted by a regression line.
cents per hour for each additional year of
2 C
experience.
3 The data is numerical; the association is linear;
g i $10.87 ii $0.33
there are no clear outliers.
h Yes; no clear pattern in the residual
4 a R V: pollution level; EV: traffic volume
plot indicating that there are no further
b pollution level
­underlying trends.
= −330 + 49 × traffic volume
5 a RV: life expectancy; EV: birth rate
b life expectancy = 110 − 1.5 × birth rate

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 556 Answers
2B → 2D

8 a r = −0.608 There are no obvious outliers. The ­equation

b 37% of the variation in the hearing test score of the least squares regression line is
is explained by the variation in age. weight = −42.35 + 0.587 × height.
c hearing test score = 4.9 − 0.043 × age The slope of the regression line predicts an
d −0.043; the hearing test score, on average, increase of 0.59 kg in weight for each 1 cm
decreases by 0.043 as age increases by 1. increase in height.
e i 4.04 ii −2.04 The coefficient of determination indicates
Answers

f i 0.3 ii −0.4 that for this sample 70.5% of the variation in

g Yes; no clear pattern in the residual weight is explained by the variation in height.
plot indicating that there are no further
­underlying trends. Exercise 2C
9 a Yes, as the variables are both numerical
and the relationship is linear. This can be seen Note: These answers are for guidance only.
in both the scatterplot and the residual plot. Alternative explanations for the source of an
b The y-intercept would give the estimated ­association may be equally acceptable as the
height of a person with an arm span of 0 cm, ­variables suggested.
which is not meaningful. 1 Not necessarily. In general, older children are
c From the scatterplot, we can see that there taller and have been learning mathematics
is a strong, positive, linear relationship longer. Therefore they tend to do better
between height and arm span: r = 0.951. on mathematics tests. Age is the probable
There are no obvious outliers. The equa- ­common cause for this association.
tion of the least squares regression line is 2 Not necessarily. While one possible explanation
height = 32.97 + 0.807 × arm span is that religion is encouraging people to drink,
The slope of the regression line predicts an a better explanation might be that towns with
increase of 0.81 cm in height for each 1 cm large numbers of churches also have large
increase in arm span. populations, thus explaining the larger amount
The coefficient of determination indicates of alcohol consumed. Town size is the ­probable
that for this sample 90.4% of the variation in common cause for this association.
height is explained by the variation in arm 3 Probably not. The amount of ice cream
span. consumed and the number of drownings would
10 a 70 both be affected by weather conditions. Weather
65 conditions are the probable common cause.
60 4 Maybe but not necessarily. Bigger hospitals
Weight

55 tend to treat more people with serious illnesses

50 and these require longer hospital stays.
45 A ­common cause could be the type of patients
40 treated at the hospital.
150 160 170 180 190
Height
6 Exercise 2D
4 1 Scatterplot shows relationship is linear. For
the total data set, r = 0.871. For the females
2
Residuals

r = 0.876, for the males r = 0.614, so the

0 relationship is stronger for females than males.
150 160 170 180 190
–2 2 In 1990 agreement with this statement for both
–4 males and females was similar in Australia and
the UK (males Aust 23%, males UK 30%,
–6
females Aust 25%, females UK 24%) , but
b From the scatterplot, we can see that there
both much lower than that of both males
is a strong, positive, linear relationship
and females in Europe (males Europe 37%,
between height and weight: r = 0.840.
females Europe 28%). In 2010 agreement with

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Answers
the statement has lowered considerably for b Student: teacher ratio explains 11.6% of the
both sexes across all three geographies, but the variation in educational attainment, making
relationship had changed for males, with males it a much more important explanatory
in Australia much less likely to agree than ­variable than amount spent on education,
those in both the UK and Europe (males Aust which explains only 5.3%.
14%, males UK 25%, males Europe 30%). 9 a 3.91 secs b 3.19 secs
3&4 Answers will vary. c Predicting for a person 55 years of age is
interpolation, and we can be reasonably
Chapter 2 review confident that this prediction will be

2 review
reliable. Predicting for a person 35 years
Multiple-choice questions of age is extrapolation, and we cannot be
1 C 2 D 3 A confident of this prediction.
4 B 5 B 6 D 10 a score
7 C 8 A 9 A b slope is 0.34, intercept is 32
10 A 11 D 12 E c 70.1 d 7.9
13 A 14 C 15 A 11 Correlation implies that two variables have been
16 E 17 C observed to vary together, either one increasing
as the other increases (positive correlation) or
Short-answer questions one increasing as the other decreasing (negative
1 Both variables are numerical, the association is correlation). It may be that this is because there
linear, there are no outliers. is a causal relationship between the variables
2 a = 91.725, b = 2.625 (for example, the further we drive the less fuel
3 a Slope = 0, the line is horizontal. there will be in the tank of the car) or it could
b Intercept = y, the mean of the RV. be because there is a third variable which is
4 Number of ice creams = 58.2+ 4.1 × temperature affecting both (e.g. age will affect both height
5 Residual = 600 and scores on and IQ test, meaning that although
6 there might be a high correlation between height
and IQ scores in children, we do not think taller
people are smarter).
12 Causal relation does not exist. It may be that
Residual

only mature people are likely to be prepared

to have children. It is also possible that the
underlying cause is age. Higher age leads to both
having children and higher maturity levels.

X Extended-response questions
7 a On average, price decreases by $5675 per 1 a days of rain b −6.88, 2850
year. c 2024 d decrease, 6.88
b On average, the price of a new caravan is e −0.696 f 48.4 , days of rain
$87 500. g i 1873 ii −483
8 a There is a weak positive correlation between h interpolation
educational attainment and the amount spent 2 a Cost
on education (r = 0.23). Those countries b Answer given in question.
which spend more on education also tend to c i $182.30, interpolating
have higher educational attainment. ii $125.60, extrapolating
There is a moderate negative correlation d i 81.5: The fixed costs of preparing meals
between educational attainment and the is $81.50.
student : teacher ratio (r = −0.34). Those ii $2.10: The slope of the regression line
countries with a higher student : teacher ratio predicts that, on average, meal prepa-
tend to have lower educational attainment. ration costs increase by $2.10 for each
additional meal produced.

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 558 Answers
2 review

e 0.956; 95.6% of the variation in the cost of d

3.0
preparing meals is explained by the varia-
tion in the number of meals produced. 1.5
3 a Male income

Residual
b $350 0.0
c i $18 250 –1.5
ii Making the prediction involves going
Answers

well beyond the data used to determine –2.0

the regression equation (extrapolation). 8 9 10 11 12 13 14 15 16 17 18 19
We have no way of knowing whether Test A
the same relationship between male and e Answers will vary.
female incomes still applies outside of 7 a
this data. 18
4 a RV: height; EV: femur length
b height = 36.3 + 5.35 × femur length 15

Score
c On average, height increases by 5.35 cm for
12
each 1 cm increase in femur length.
d r2 = 0.988; that is, 98.8% of the variation in
9
height is explained by the variation in femur
length. 0 1 2 3 4 5 6 7 8
Errors
5 a RV: height; EV: age
b score = 17.5 − 1.08 × error,
b Answer given in question.
r = −0.841, R2 = 0.707
c 83 cm, extrapolation
c
d On average, height increases by 6.4 cm for
18
each extra year.
e r2 = 0.995; that is, 99.5% of the variation in y = 17.5 – 1.08333x
15
Score

height is explained by the variation in age.

f i 140.3 cm ii −0.7 cm 12
g i Answer given in question.
ii Clear curved pattern 9
6 a
0 1 2 3 4 5 6 7 8
17 Errors
d
Test B

14 1.5
Residual

0.0
11
–1.5
8 9 10 11 12 13 14 15 16 17 18 19
–2.0
Test A
b test B score = 4.2 + 0.72 × 0 1 2 3 4 5 6 7 8
test A score, r = 0.78, R2 = 0.61 Errors
c e Answers will vary.
8 a RV: adult weight; EV: birth weight
17 b
60
Test B

Adult weight

14
56
13
50
8 9 10 11 12 13 14 15 16 17 18 19
Test A 1.0 2.2 2.6 3.0 3.4 3.6 4.2
Birth weight

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c i S
 trong, positive, linear association with 3 30
no outliers 25
ii Your judgement

Temperature
20
d adult weight = 38.4 + 5.86 × birth weight,
R2 = 0.765, r = 0.875 15
e 76.5% of the variation in the adult weight is 10
explained by the variation in birth weight. 5
f On average, adult weight increases by 5.9 kg
0

2 review → 3A
for each additional kilogram of birth weight. Mon Tues Wed Thur Fri Sat Sun
g i 56.0 Day
ii 53.1
4
iii 61.3 25
h Yes. 76.5% of the variation in the adult 24.5

Population (1000 000)

weight is explained by the variation in 24
23.5
birth weight.
23
i 3.0
22.5
22
1.5
21.5
Residual

21
0.0
20.5
2005 2010 2015 2020
–1.5 Year
5
–3.0
600
1.0 2.2 2.6 3.0 3.4 3.6 4.2 500
Theft rate

Birth weight 400

300
The lack of a clear pattern in the r­ esidual 200
plot supports the assumption that the 100
­relationship between adult weight and birth 0
2002 2004 2006 2008 2010 2012 2014 2016
weight is linear. Year
6
6000
Exercise 3A 5000
1 80 4000
Measles

3000
2000
60
1000
Sales

0
40 1985 1990 1995 2000 2005 2010 2015 2020
Year
20 7
3.5
0 3.4
2008 2010 2012 2014 2016 2018 2020 3.3
Carbon Intensity

Year 3.2
3.1
2 800
Number of penguins

3
700 2.9
600
500 2.8
400 2.7
300 2.6
200 2.5
100 1950 1960 1970 1980 1990 2000 2010 2020
0 Year
November
September

December
October
March

August
April
May
June
Jan
Feb

July

Month

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 560 Answers
3B → 3C

Exercise 3B of the 1920 catch. In the period 1945–1960

the numbers increased but then fell again
1 Feature Plot A Plot B Plot C from 1960–1985 when numbers were back to
Irregular ✓ ✓ ✓ around the 1920 level.
fluctuations 6 The population of Australia shows a

✓
steady increasing trend over the years
Increasing trend 2006–2017.
✓
Answers

Decreasing trend 7 The motor vehicle theft rate shows steady

✓
decreasing trend over the years 2003–2010.
Cycles From 2010 to 2014, the motor vehicle theft
Outlier ✓ rate shows some variation from year-to-year,
but overall remains fairly steady.
8 The number of measles cases in Australia
2
Feature Plot A Plot B Plot C started to increase in 1990, showing a peak
Irregular ✓ ✓ ✓ in 1993–1994. In 1995 the number of cases
fluctuations reported started dropping back to pre-1990 ­

✓
levels, and since 2000 have remained
Increasing trend
✓
steady at a low level. Note that there was
Decreasing trend a slight increase in the number of cases

✓ ✓
in 2013–2014.
Cycles 9
✓ ✓
The levels of carbon intensity vary randomly
Seasonality from year-to-year. Over the years 1960–1977,
the overall levels seem quite steady, then there
was a marked increase in carbon intensity
3
Characteristic Plot A Plot B Plot C between 1977 and 1980. From 1980–1990 the
Irregular ✓ ✓ levels remained high. In 1990 levels dropped
fluctuations but not as low as pre-1980 levels. Levels

✓
remained steady from 1990 to 2012. Since
Structural change
✓
2012, levels appear to be reducing again.
Increasing trend
✓
Exercise 3C
Decreasing trend
✓
1 C 2 A 3 B 4 D 5 A
Seasonality 6 a 3 b 1 c 4 d 3.2
e 1.2 f 2.2 g 3.75 h 2.0
4 a T he percentage of males who smoke has
i 3.25 j 1.5
consistently decreased since 1945, while the
7 t 1 2 3 4 5 6 7 8 9
percentage of females who smoke increased
from 1945 to 1975 but then decreased
y 10 12 8 4 12 8 10 18 2
at a similar rate to males over the period
1975–1992. 3-mean − 10 8 8 8 10 12 10 −
b Decrease
5-mean − − 9.2 8.8 8.4 10.4 10 − −
5 The number of whales caught increased
rapidly between 1920 and 1930 but levelled
off during the 1930s. In the period 1940–1945
there was a rapid decrease in the number of
whales caught and numbers fell to below those

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Answers
8 a, c • exchange rate
45 • 3-moving mean exchange rate
40 • 5-moving mean exchange rate
Temperature 35 The exchange rate has a downward trend over
30 the 10-day period. This is most obvious from
25 the smoothed plots, particularly the 5-moving
20 mean plot.
15 b
Day Exchange 3-moving 5-moving

3C
10
5 rate mean mean
0 1 0.743 − −
0 1 2 3 4 5 6 7 8 9 10
Day 2 0.754 0.745 −
3 0.737 0.747 0.742
Raw data
3-mean smoothed 4 0.751 0.737 0.738
5-mean smoothed 5 0.724 0.733 0.730
6 0.724 0.720 0.729
The smoothed plots show that the ‘average’
maximum temperature changes relatively 7 0.712 0.724 0.722
slowly over the 10-day period (the 5-day 8 0.735 0.721 0.720
­average varies by only 5°) when compared
to the daily maximum, which can vary quite 9 0.716 0.721 −
widely (for example, nearly 20° between the 10 0.711 − −
fourth and fifth day) over the same period
of time. 10
Month Number 2-moving 2-moving
b of births mean mean with
Day Temperature 3-moving 5-moving
(Cº) mean mean centring

1 24 − − January 10
11
2 27 26.3 −
February 12 10
3 28 31.7 28.2
9
4 40 30.0 28.0
March 6 7.25
5 22 28.3 27.0
5.5
6 23 22.3 25.6
April 5 9.5
7 22 22.0 22.6 13.5
8 21 22.7 23.4 May 22 16.75
9 25 24.0 − 20
10 26 − − June 18 17.75

9 a, c 15.5

0.76 July 13 12.75

Exchange rate

0.75 10
0.74
0.73 August 7 9
0.72
0.71 8

0 1 2 3 4 5 6 7 8 9 10
Day

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 562 Answers
3C → 3E

13 Number of students: 56 125 126 96

Month Number 2-moving 2-moving
Deseasonalised numbers: 112 125 97 80
of births mean mean with
Seasonal index 0.5 1.0 1.3 1.2
centring
14 a, c
September 9 8.75 Deseasonalised 152 142 148 153
9.5 Seasonal index 1.30 1.02 0.58 1.1
b In quarter 1 the restaurant chain employs
October 10 9.25
Answers

30% more waiters than the number

9 employed in an average quarter.
November 8 10.25 15
Q1 Q2 Q3 Q4
11.5 0.89 0.83 1.12 1.16
December 15
16 Jan Feb Mar April May June
11
Month Internet 4-moving 4-moving 0.89 0.96 1.04 1.26 1.33 1.11
usage mean mean with
centring
July Aug Sept Oct Nov Dec
April 21
0.67 0.74 0.59 0.81 1.11 1.48

17
May 40 Jan Feb Mar April May June
38.75 1.1 0.95 1.25 1.15 1 0.9
June 52 43.375
July Aug Sept Oct Nov Dec
48
1 0.75 0.7 0.55 1.15 1.5
July 42 52.875
57.75
Exercise 3E
August 58 61.375
1 a population = −692.74 + 0.3556 × year
65
b 27.0 million
September 79 66.5 2 a, d
68 13
October 81 67 12
Sales

11
66 10
November 54 9
1 2 3 4 5 6 7 8 9 10 11 12
Year
December 50 b General decreasing trend in the percentage
of retail sales made in department stores
c sales = 12.5 − 0.258 × year (to 3 sig. figs)
Exercise 3D The percentage of total retail sales that are
made in department stores is decreasing by
1 C 2 B 3 E 4 B approximately 0.3% per year.
5 C 6 D 7 B 8 C e 8.6%
9 D 10 D 11 A 12 B

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Answers
3 a The number of university students in Australia b
80.0
has increased steadily from 2006 to 2016.

Number of births
number of university students 78.0
(000’s) = −72 247.92 + 36.373 × year 76.0
b The slope tells us that on average the num- 74.0
ber of university students is increasing by
72.0
36 373 per year.
70.0
c 1 407 400 to the nearest 100. Jul‐2009 Nov‐2010 Apr‐2012 Aug‐2013 Dec‐2014 May‐2016 Sep‐2017
4 a d eseasonalised number

3E → 3F
Quarter
= 50.9 + 1.59 × quarter number Graph still shows some variation but no
b deseasonalised number = 76.34 clear trend.
reseasonalised (actual)number = 90 (to the c Using the years 2013–2015
nearest whole number) Q1 Q2 Q3 Q4
5 a number of international visitors
(000’s) = −276 641 + 140.627 × year 1.000 0.993 1.016 0.990
b 8 831 800 to the nearest 100. It may not be Four-point moving average has been chosen
reliable because we are extrapolating well to remove any quarterly seasonality.
outside the range of the data and the trend d There is not a strong seasonal pattern in
may no longer be linear. the number of births, although we do see a
6 a slightly higher birth number than average in
Year Quarter Quarter Quarter Quarter
Q3, and slightly lower in Q1 and Q4.
1 2 3 4
e If quarters are numbered 1–24,
1 122 128 118 130 then the number of births (000’s) =
77.175 − 0.0334 × quarter. Predicted
2 250 245 263 236
­number for Q3 2020 is 75 900 to the nearest
b 400 100. The intercept predicts the number of
sales births in quarter 0, which would be Q4 2010.
300 The slope indicates that the number of births
is decreasing by about 33 each quarter.
Sales

200 deseasonalised
sales 2 a i  
2500.0
100
Employed (000's)

2450.0
2400.0
0
2350.0
0 1 2 3 4 5 6 7 8
2300.0
Quarter
2250.0
The deseasonalised sales appear to show an 2200.0
April

April

April

April

April
July

July

July

July

July
Oct

Oct

Oct

Oct

Oct
Jan

Jan

Jan

Jan

Jan

increasing trend over time.

c deseasonalised sales = 80.8 + 23.5 × quarter Month
d forecasted actual sales = 386 × 1.13 = 436 The plot shows both a clear increasing
trend as well as quite a lot of month-
Exercise 3F to-month variation. There is also
1 a some e­ vidence of seasonality, with the
80.0
number of employed appearing to drop
each January.
Number of births

78.0
76.0 ii Using 2014 and 2015:
74.0
Jan Feb March April May June
72.0
70.0 0.972 0.996 0.995 0.999 1.005 1.003
Jul‐2009 Nov‐2010 Apr‐2012 Aug‐2013 Dec‐2014 May‐2016 Sep‐2017
Quarter July Aug Sept Oct Nov Dec
The number of births shows mainly random
1.000 1.001 1.002 1.007 1.004 1.017
variation from Q1 2011 to Q3 2016.
There seems to have been a drop in Q4 2016.

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 564 Answers
3F → 3 review

iii As suggested by the plot, the ii Using 2014 and 2015

­seasonality indexes confirm that
Jan Feb March April May June
employment is lowest in January, and
then increases steadily to average 1.039 1.164 1.094 0.987 0.974 0.949
month levels by May. It then remains
July Aug Sept Oct Nov Dec
fairly steady, peaking in December
before dropping again in January. 0.995 0.999 0.971 0.999 0.912 0.915
iv
2500.0 iii As suggested by the plot,
­unemployment is highest in the
Employment (000s)

2450.0
Answers

period January to March, lower

2400.0
but ­reasonably steady from April
2350.0
to October, and then reducing in
2300.0 November and December.
2250.0 iv
2200.0 200.0
May

190.0
May

May

May

May
Sept

Sept

Sept

Sept

Sept
Jan

Jan

Jan

Jan

Jan

Unemployed (000's)
180.0
Month 170.0
160.0
Overlaying the deseasonalised data 150.0
in the plot we can see that some of 140.0
130.0
the variation in the data has been 120.0
removed. 110.0
100.0
v With month numbered 1–60: April

April

April

April

April
July

July

July

July

July
Oct

Oct

Oct

Oct

Oct
Jan

Jan

Jan

Jan

Jan
employed(000’s) = 2285.53 +
2.0999 × month Month

Intercept (2 285 530) gives the Again, deseasonalisation of the data has
­estimated number of employed in removed some of the variation.
Month 0, which would be December v With month numbered 1–60:
2012. Slope indicates that on average unemployed(000’s) = 148.68 +
employment is growing by 2100 per 0.1693 × month
month. Intercept (148 680) gives the estimated
b i number of employed in Month 0, which
200.0 would be December 2012. Slope indi-
190.0
cates that on average unemployment is
Unemployed (000's)

180.0
170.0 growing by about 170 people per month.
160.0
c A scatterplot of unemployed against
150.0
140.0 employed shows that, contrary to what
130.0 we might expect, there is no relationship
120.0
110.0 between employed and unemployed. This
100.0 is confirmed by the value of the correlation
April

April

April

April

April
July

July

July

July

July
Oct
Jan

Jan

Oct
Jan

Oct

Oct

Oct
Jan

Jan

coefficient, r = −0.126.
Month
The plot shows month-to-month
Chapter 3 review
variation, with no clear trend. There
is evidence of seasonality, with Multiple-choice questions
­unemployment to peak in February
1 C 2 A 3 B 4 E
and be at its lowest in November
5 C 6 C 7 B 8 A
each year.
9 E 10 E 11 D 12 C
13 A 14 A 15 D 16 A

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 Answers 565  

Answers
Short-answer questions b The GDP per capita increased steadily
y between 2005 and 2012, with the ­exception
1 of 2009 where there was a significant drop.
100
Since 2012, Australia has seen a steady
80 decrease in GDP per capita, although
improved results in 2016 may indicate that
Sales

60
the GDP is now steady.
40
c GDP = −3 874 825 + 1953.58 × year
20 d Predicted 2017 = $65 546, error = $9411

3 review
x 2 a&b
2012 2013 2014 2015 2016 2017 2018 2019 2020
2015
Year 700
600
2 Trend is when there is an overall increase or 500
decrease in the time series.

Rainfall
400
Seasonality is when there is a periodic 300
­movement in the time series that is calendar 200
related, such as weekly or monthly. 100
A cycle is also a periodic movement in the 0
time-series, but this is generally used for time Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Month
period of greater than one year.
3 The time series plot shows an increasing In 2015 the highest rainfall in Cairns is in
trend over the 12 years, with cycle of 4 years the months from February to April, and then
within this. a steady decease in rainfall from April to
4 Smoothing is used to eliminate some of the November.
random variation in a time series plot, so that c&d
the features such as trend can be more easily 2016
identified. 300
5 a 22.3 b 32.8 250
6 0.7071
200
7 0.7053
Rainfall

8 2214.4 150

9 a 1.86 100
b On Saturday the ice cream sales are 86% 50
higher than they are on an average day.
0
10 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Q1 Q2 Q3 Q4 Month

0.64 1.78 1.18 0.42 In 2016 the highest rainfall in Cairns is in

the months from February to April, and then
11 a 000's of visitors = −571 149.46+286.75 × year a steady decease in rainfall from April to
b 9 519 289 – may be unreliable as we are November.
extrapolating. e Both charts show the highest rainfall in
12 205 to the nearest whole person. Cairns in the months February to April,
and then a steady decease in rainfall from
Extended-response questions
April to October, when rainfall then starts
1 a to increase again.
75000 3 a 3-mean smoothed value for 1992
GDP per capita ($US)

65000
13.0 + 10.5 + 9.5 33
55000
= = = 11%
3 3
45000

35000

25000
2004 2006 2008 2010 2012 2014 2016 2018
Year
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 566 Answers
3 review → 4B

b 18 6
n 1 2 3 4 5
16

Interest rate (%)

14 tn 10 15 20 25 30
12
10 tn
8
6 30
4 25
2
20
1987

1989
1990
1991
1992
1993
1994
1995
1988

1996
1997
15
Average mortgage interest
Answers

10
rate
3-moving mean
Trend line n
0 1 2 3 4 5
c Both the raw data and the smoothed data
reveal a steadily decreasing trend. 7
n 1 2 3 4 5
tn 12 10 8 6 4
Chapter 4 tn

Exercise 4A 12

1 a 2, 8, 14, 20, 26 b 5, 2, –1, –4, –7 10

c 10, 5, 2.5, 1.25, 0.625 d 6, 12, 24, 48, 96 8
2 a 4, 6, 8, 10, 12 b 50, 10, 2, 0.4, 0.08 6
c 24, 20, 16, 12, 8 d 5, 15, 45, 135, 405 4
e 2, 10, 50, 250, 1250 2
n
0 1 2 3 4 5
Exercise 4B
1 3, 7, 11, 15, 19 2 15, 11, 7, 3, –1 8
n 1 2 3 4 5
3 a 4 b 40
tn 12 8 4 0 –4
c 7 times, t8 = 48 d 12 times, t13 = 68
4 a –2 b –5 tn
c 6, t7 = −7 d –13, –93
12
5
n 1 2 3 4 5
8
tn 9 5 1 –3 –7

tn 4

9
n
0 1 2 3 4 5
5
−4
1
n
0 1 2 3 4 5
−3

−7

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 Answers 567  

Answers
9 b tn
n 0 1 2 3 4
sn 12 15 18 21 24 12
10
sn
8
24 6
21 4
18 2
n

4B → 4C
15
0 1 2 3 4 5
12
9 c tn
6
3 16
n
0 1 2 3 4 5 12
8
4
Exercise 4C
n
1 a 220 b 290 c 1700 0 1 2 3 4 5
2 tn = 7n − 1 3 tn = 59 − 11n d tn
4 tn = 11n − 3 5 tn = 1020 − 20n
6 a 55 b –16 6
c 0.36 d 101
e –5.5 f –528 3
g –1 n
7 4 0 1 2 3 4 5
8 8 −3
9 a 7, 12, 17 b 1, 4, 7
−6
c 20, 16, 12 d 99, 104, 109
e 20, 16, 12 f 120, 110, 100
g –25, –20, –15 e tn
10 a 12 b 19
c 9 d 8 10
e 7 f 10
g 27 5
11 a tn
n
0 1 2 3 4 5
11
−5
9
7 −10
5
12 A: a = 25, d = – 4, tn = 29 − 4n
3
B: a = 5, d = 5, tn = 5n
n
C: a = 18, d = –1, tn = 19 − n
0 1 2 3 4 5 D: a = 1, d = 6, tn = 6n − 5
13 a tn = 2n b 2, 4, 6, 8
14 a tn = 6n + 5 b 11, 17, 23, 29
15 a tn = 59 − 3n b 56, 53, 50, 47

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 568 Answers
4C → 4D

16 a tn = 2n + 3 Exercise 4D
b
n 1 2 3 4 5 1 a $375
b
tn 5 7 9 11 13
Year 1 2 3 4 5
c tn
Value ($) 5375 5750 6125 6500 6875
13
c A = 5000 + 375n dollars
Answers

11
9
d i $10 625 ii $14 375
2 a $4500
7
b
5
3 End of year 1 2 3 4 5
1 Amount ($) 54 500 59 000 63 500 68 000 72 500
n
0 1 2 3 4 5
c A = 50 000 + 4500n
17 a tn = 24 − 4n d i $117 500 ii $162 500
b 3 a A = 60 000 + 2700n
n 1 2 3 4 5 b $73 500
tn 20 16 12 8 4 c 8 years
4 a A = 2000 + 76n
c tn b $2456
20 c 14 years
5 a A = 7000 + 518n
16 b $10 108
12 c 6 years
6 a A = 100 000 − 4000n b $80 000
8
n
7 a V = 48 000 −
4 5
b $45 000
n
0 1 2 3 4 5
c 25 000 km
8 a Cn = 2.25 + 0.02n
18 a tn = 2n + 8 b i $2.45 ii $2.95
b c i 80 pages ii 200 pages
n 1 2 3 4 5
9 a gn = 86 + 40n
tn 10 12 14 16 18 b i 686 kg ii 1166 kg
c 35
c tn
10 a an = 15 − 0.2n
18 b i 10.4 litres ii 6 litres
16 c 67
14
12 11 a sn = 20 500 + 450(n − 1)
10 b i $22 300 ii $23 650
8 c Start of 67th year
6
4 12 a mn = 430 − 25.75(n − 1)
2 b i $275.50 ii $121
n
0 1 2 3 4 5 c 17 days
19 t1 = 7, d = 5
20 t1 = 2, d = −2
21 t1 = 18, d = 7; t1 = 18, tn+1 = tn + 7
22 t1 = 3, d = −5; t1 = 3, tn+1 = tn − 5

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 Answers 569  

Answers
Exercise 4E Exercise 4F
1 3, 12, 48, 192, 768 2 15, 30, 60, 120, 240 1 a 16 b 4096 c 268 435 456
3 a 10 b 20 000 2 tn = 8 × 5n– 1
c 4 d 14, 2 × 1014 3 tn = 5 × 0.6n– 1
4 a 15 625 b 0.128 c 512
1 1
4 a b 4 c 6, d –131 220 e 0.015625
4 4
d 0.00390625, 3.23 × 10−27 f 161.051 g 0.015625
5 a –5 b –625 c 5, 3125 5 a 1, 3, 9

4E → 4F
d 14, – 6 103 515 625 b 20 000, 10 000, 5000
6 c 10, –20, 40
n 1 2 3 4 5 d 128, 160, 200
tn 9 18 36 72 144 6 a 8 b 9
c 12 d 10
tn
e 22 f 16
144 g 15
7 a tn

16
72 14
12
36 10
18 8
9 6
n
0 Sequence A
1 2 3 4 5 4
2
7 n 1 2 3 4 5 n
0 1 2 3 4 5
tn 12 6 3 1.5 0.75
b tn
tn
100
12
80
60
Sequence B
6 40
3 20
1.5
0.75 n n
0 1 2 3 4 5 0 1 2 3 4 5
8 c tn
n 1 2 3 4 5
tn 4 16 64 256 1024 1000

tn 800
Sequence C
600
1024
400
200
n
0 1 2 3 4 5
256
64
n
0 1 2 3 4 5
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 570 Answers
4F → 4 review

d tn b   i 113.91 cm
ii hn = 360(0.75) n
160
iii 4.81 cm
140
120 10 a 20
100 b
1 2 3
80
60 10 20 40
40 Sequence D
20 c bn = 10 × 2n−1
n d i 160   ii 640 iii 40 960
0 1 2 3 4 5 11 a 1400
Answers

b
e tn 1 2 3 4
1500 1000 1400 1960 2744
1000 c Fn = 1000(1.4) n−1
Sequence E
500 d i 7530   ii 28 925 iii 836 683
n 12 a $18 500
0 1 2 3 4 5
−500 b
1 2 3 4
−1000
20 000 18 500 17 113 15 829
8 Sequence A c Vn = 20 000(0.925) n−1
a 25 b 0<r<1 c r ≈ 0.6 d i $12 528 (to the nearest dollar)
Sequence B ii $10 719 (to the nearest dollar)
a 10 b r>1 c r ≈ 1.2 iii $6211 (to the nearest dollar)
Sequence C 13 a $27 000
a 10 b 0<r<1 c r ≈ 0.5 b
1 2 3
9 a 2, 4, 8, 16 b 2
12 000 27 000 60 750
Exercise 4G c Vn = 12 000(2.25) n−1
1 a A=P× 0.9612m d i $307 547 (to the nearest dollar)
b A = 30 000 × 0.965n ii $1 556 956 (to the nearest dollar)
2 a A = 2700 × 1.05n iii $39 903 081 (to the nearest dollar)
b 3446 c 15 years
d 971 e 18 years Chapter 4 review
3 A = 6000 × (1.042) n
4 a A = 20 000 × (1.063) n Multiple-choice questions
b 7 years 1 C 2 A 3 B 4 B 5 C
c A = 18 000 × (1.094) n 6 A 7 D 8 D 9 C 10 C
5 a A = 9800 × (0.965) n 11 D 12 B 13 D 14 A 15 C
b $8201 c $319 16 C 17 B 18 B 19 A 20 D
6 a A = 8000 × (1.125) n
b $11 390.63 c $3390.63 d $1265.63 Short-answer questions
7 a A = 3300 × (1.075) n
b $6801.40 c $3501.40 d $474.52 1 46 2 56 3 320
8 a A = 1200 × (0.88) n 4 7.8125 5 72 6 tn = 17− 4n
b $490.41 7 1, 6, 11 8 10, 20, 40 9 10
9 a 
Yes, the ratio of height of bounce to 10 9 11 6, 12, 18 12 1000, 500, 250
­previous bounce is constant = 0.75 (small 13 tn = 13 − 5n 14 tn = 3n − 1 15 4374
discrepancies in value of r can be attributed 16 a tn = 2 × 6n − 1 b 2592
to accuracy of original measurements). c Approx. 3.385331889 × 1013

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 Answers 571  

Answers
17 a tn = 120 × 0.25n– 1 19 a A = 20 000 + 1880n
b 7.5 b $29 400 c 11 years
c Approximately 0.000002 20 a 20 cents b A = 1650 − 0.2n
(1.788139343261719 × 10–6) c $1250
18 a A = 38 500 × 0.905n
b $23 372.42 c $15 127.58

Extended-response questions

4 review → 5A
1 a i A = 22 500 − 2700n   ii $9000
b i B = 22 500 × 0.84n   ii $9409.77
c 25000
20000
15000
10000
5000

O 1 2 3 4 5
Flat-rate
Reducing
2 a $6575 b $6777.89 c 7.1%

3 a
Day 1 2 3 4 5 6 7 8 9 10
Emission 1500 1370 1240 1110 980 850 720 590 460 330
each day
b 162.5 kg
c i 0.75
ii
Day 1 2 3 4 5 6 7 8 9 10
Emission 1500.00 1125.00 843.75 632.81 474.61 355.96 266.97 200.23 200.00 200.00
each day

d Day 8
e 3350.67 kg
f 20.1%

Chapter 5
Exercise 5A
1 a 32°27′ b 43°12′ c 122°27.6′
d 91°7.2′ (minutes to one decimal place) e 45′
2 a 32.75° b 15.5833° c 7.36667° d 142.733° e 67.25°
3 a 50.27 cm b 87.96 m c 282.74 mm d 37.70 mm e 43.98 m
1 3 1 1 1 5
4 a b c d e f
4 4 12 3 6 12
5 a 7.85 cm b 10.47 cm c 26.18 cm d 23.56 cm e 36.65 cm f 57.60 cm
6 a 13.09 cm b 5.24 cm c 78.54 cm d 37.70 cm e 122.17 cm f 109.96 cm

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 572 Answers
5A → 5C

7 45.81 cm 17 a 4226 km b 5782 km c 14 234 km

8 a 95.5° b 47.75° 18 a 4176 km b 14 184 km c 5832 km
9 6.20 cm 19 a Equator 4670 km; North Pole 5338 km;
South Pole 14 678 km
Exercise 5B b Equator 6116 km; North Pole 3892 km;
South Pole 16 124 km
1 a Bucharest, Romania
c Equator 1668 km; North Pole 11 676 km;
b Oslo, Norway
Answers

South Pole 8340 km

c Houston, USA
d Equator 1557 km; North Pole 11 565 km;
d Singapore
South Pole 8451 km
e Cape Town, South Africa
20 a 6154 km b 5517 km
2 a 30.04°N, 31.24°E
c 4505 km d 3186 km
b 19.43°N, 99.13°W
21 60°N, 60°S
c 34.60°S, 58.38°W
22 a 1134 km b 2829 km c 5439 km
d 19.08°N, 72.88°E
23 10 045 km
e 6.5°N, 3.37°E
24 a 1371 km b 6783 km
f 17.83°S, 31.03°E
c 4689 km d 2391 km
3 a 28.04°S, 148.59°E
25 a 9129 km b 12 485 km
b 26.80°S, 153.13°E
c 13 232 km d 9898 km
c 21.14°S, 149.18°E
26 a 445 km b 645 km c 1090 km
d 12.65°S, 141.85°E
27 a 2335 km b 2340 km c 4675 km
e 24.87°S, 152.35°E
28 Answers will vary
f 20.08°S, 146.26°E
g 138°E
4 a (65°N, 0°) b (0°, 75°E) Exercise 5C
5 a (18°N, 24°E) b (38°N, 44°E) 1 a X is 2 hours ahead of Y
c (17°S, 23°E) d (43°N, 37°W) b X is 5 hours ahead of Y
6 a i Mexico City, Yangon c Y is 5 hours ahead of X
ii Brisbane d Y is 1 hour 48 minutes ahead of X
b i Brisbane ii Plymouth 2 a i 1 hour 28 minutes behind
iii London iv Zurich ii 9 hours 52 minutes ahead
c Marseilles, Mexico City, Plymouth, Zurich, iii 3 hours 48 minutes ahead
London, Yangon iv 10 hours 12 minutes ahead
d Plymouth, Mexico City, Lima, London v 16 hours 48 minutes ahead
(just) b i 7:28 a.m.
e Mexico City, Yangon ii 8:08 p.m. the day before
f Cooktown, Melbourne iii 2:12 a.m.
g London iv 7:48 p.m. the day before
h Wellington v 1:12 p.m. the day before
7 6338 km 3 a 150°W b 2 p.m.
8 2313 km c 7:30 p.m. the day before
9 1779 km 4 a 5:30 p.m. b 7:30 a.m.
10 34.27°S 5 a 45° b 3 hours
11 a 3892 km b 3002 km c 4893 km c 2:45 p.m.
d 4448 km e 3336 km 6 a 3:26 a.m. Sunday
12 3558 km b 5:34 p.m. Saturday
13 4003 km c 6:30 p.m. Saturday
14 a 5560 km b 7784 km c 3336 km d 3:22 a.m. Sunday
d 6672 km e 16 902 km e 10:26 a.m. Saturday
15 5.4° f 7:22 a.m. Saturday
16 a 3336 km b 6672 km c 13 344 km

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Answers
7 a 3 a.m. the same day b 3 p.m. the next day Short-answer questions
8 a 3 a.m. the same day b 5 a.m. the next day Simple familiar questions
9 a 4 p.m. Monday b 14 hours
1 a Numerical & numerical, scatterplot
c 13 hours 55 minutes
b Categorical & numerical, parallel boxplots
10 a 12 midday same day
c Categorical & categorical, two-way
b 11:30 a.m. same day
­frequency table
c 10 a.m. same day
2 a EV: time of observation, RV: activity
d 12 midday same day
b 38%

5C → 6A Topic 1
e 2 p.m. same day f 1 p.m. same day
c Yes. Only 6.7% of dolphins were observed
g 2 p.m. same day
feeding in the afternoon, less than the
h 4 p.m. the day before
percentage observed feeding in the morning
i 1 p.m. same day
38%, and very much less than the percent-
Chapter 5 review age observed feeding in the evening 70.9%.
3 a EV: hours, RV: mark
Multiple-choice questions b 100
1 C 2 B 3 A 4 E 80
5 E 6 B 7 C 60

Mark
40
Short-answer questions
20
1 3336 km
0
2 3892 km 0 10 20 30 40
Hours of study
3 a 52°
b 3 hours 28 minutes c There is a strong, positive linear relationship
c 6:13 a.m. between hours of study and mark. Those
4 (0°, 160°W) who studied more hours obtained higher
5 19 905 km marks in the examination.
6 3 hours 8 minutes 4 a 
0.966. There is a strong, positive linear
7 8 a.m. relationship between male and female life
8 5 a.m. expectancies. Those countries that have
9 7 p.m. high male life expectancies also tend to
10 6 a.m. Saturday have high female life expectancies.
11 a 4 p.m. Tuesday b 2 p.m. Wednesday b The variables are both numerical and the
12 a 15 hours 28 minutes relationship is linear.
b 11:28 a.m. Tuesday c 8:32 a.m. Thursday 5 a EV: mother height, RV: daughter height
b 180
Extended-response questions 175
Daughter (cm)

170
1 a 5543 km b 1451 km
165
c 6400 km d 1 km
160
2 a 5226.4 km b 5842.58 km
c 16 622.26 km 155

150

Chapter 6
150 155 160 165 170 175
Mother (cm)
c 0.612, moderate
6A Topic 1 Bivariate data analysis d daughter height = 50.23 + 0.715 ×
mother height
Multiple-choice questions Intercept: mother’s height of 0 cm predicts
1 C 2 E 3 B 4 E a daughter’s height of 50.23 cm, which is
5 E 6 D 7 C 8 A meaningless. Slope: An increase of 1 cm
9 D 10 B 11 A 12 B in mother’s height predicts an increase of
13 E 14 B 15 D 16 A 0.715 cm in daughter’s height.

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 574 Answers
6A Topic 1

e R2 = 37.5%. 37.5% of the variation in g R2 = 78.1%. 78.1% of the variation in

daughter’s height can be explained by the player’s weight is explained by the variation
variation in mother’s height. in their height.
f 171.8 cm
g Interpolation, as 170 cm is within the range Complex familiar questions
of the data used to determine the equation of
9 a cost = 165.63 + 5.97 × number of meals
the regression line.
b Base cost = $165.63
6 a −15.5, 2.7
Answers

c Additional cost per meal = $5.97

b 20
15
10 A study was conducted to investigate the
10
relationship between femur length and radius
length. Data were collected from a sample of
5
10 people.
0
0 5 10 15 20 25 30 35 40 From the scatterplot of radius versus femur, we
−5
can see that there is a strong, positive, linear
−10
relationship between femur length and radius
−15
length: r = 0.988. That is, those people with
−20
a longer femur also tended to have a longer
The residual plot shows only random radius. There are no obvious outliers, and
­variation, so the linearity assumption holds. the linearity assumption is confirmed by the
7 a EV: played, RV: weekly sales residual plot. The equation of the least squares
b regression line is:
4500 radius = −7.25 + 0.739 × femur
4000 The slope of the regression line predicts an
Weekly sales

3500 increase of 0.739 cm in radius for each 1 cm

3000 increase in femur.
The coefficient of determination tells us that
2500
97.5% of the variation in radius is explained by
2000 the variation in femur.
1500 11 a Birth rate 76.7%, births attended by skilled
20 25 30 35 40 45 50 55 staff 51.0%, exclusive breastfeeding 2.9%,
Played health expenditure 24.5%, literacy rate
c r = 0.9485 female 64.0%, literacy rate male 72.1%,
d Strong, positive, linear relationship safe sanitation 40.4%, safe drinking water
e weekly sales = 293 + 74.3 × played 66.7%.
f Slope: on average, the number of ­downloads b Of the variables listed, only exclusive
increases by 74.3 for each additional time breastfeeding does not appear to be related
the song is played on the radio in the to infant mortality. The variation in infant
­previous week. mortality is strongly related to birth rate,
Intercept: predicts 293 ­downloads of the and parent’s educational levels (as indicated
song if it is not played on radio in the by literacy rate, particularly their fathers).
­previous week. Also important are access to clean water,
g 7723 skilled health staff, and safe sanitation (in
h Extrapolating that order). Expenditure on health is also
8 a EV = height, RV = weight indicated to be able explain a reasonable
b Yes, scatterplot shows a linear relationship. percentage of the variation in mortality rate.
c weight = −79.78 + 0.878 × height 12 There is an association between preference
d Slope = 0.878. On average, each additional for type of instruction and faculty. A higher
centimetre in height adds an additional level of preference for online study is seen in
0.878 kg to a player’s weight. Business students (58.6%), reducing to similar
e A player will never be 0 cm tall. percentages for Arts and Science students
f 91.4 kg (36.3% and 36.0% respectively).

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Answers
Extended-response questions Residual plot shows that the relationship
Complex unfamiliar questions is not linear as points are not evenly
distributed above and below the zero line
1 a The value of the correlation coefficient and indicate another underlying trend.
would be closer to −1. b i
b The value of the slope would decrease Time (Time)2 Distance
(become close to −2). (seconds) (metres)
2 a $22.90 per pair of jeans 0 0 0
b $147.90 1 1 5.2

6A Topic 1 → 6B Topic 2
c i $258.83 ii $83.83 2 4 18
3 a There is a relationship between political 3 9 42
affiliation and attitude to a republic for 4 16 79
males, with 28.2% of those who ­identify 5 25 128
as Liberal in favour of retaining the Queen, 6 36 168
compared to only 8.1% of those who
­identify as Labor wanting to retain the ii
Queen. 200
b There is a relationship between political
affiliation and attitude to a republic for 150
females, with 36.7% of those who ­identify Distance (meters)
as Liberal in favour of retaining the Queen, 100

compared to only 16.3% of those who

­identify as Labor wanting to retain the 50

Queen.
c For both males and females, the relationship 0
10 20 30 40
0
between support for a republic and political Time squared

affiliation is the same, with both groups iii distance = 0.45 + 4.803 × time2
showing a stronger preference for retaining iv
the Queen in Liberal supporters than in
8
Labor supporters.
4 a i 5

200
3
Residual

150 0
Distance (metres)

−3

100
−5

0 10 20 30 40
50 Time squared

Linearity assumption is better met.

0
0 1 2 3 4 5 6
Time (seconds)
Problem-solving and modelling
ii distance = −23.96 + 28.950 × time
5 Answers will vary.
iii
30 6 Answers will vary.
20

10
6B Topic 2 Time series analysis
Residual

0 Multiple-choice questions
−10 1 A 2 A 3 A 4 B 5 E
−20
6 B 7 E 8 B 9 D 10 E
11 E 12 B 13 E 14 D 15 A
−30
0 1 2 3 4 5 6
Time (seconds)

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 576 Answers
6B Topic 2

Extended-response questions e number of purchases = 1266.4 +

Simple familiar questions 45.01 × quarter
f
1 2000
30000 1900

Number of purchases
28000 1800
26000 1700
1600
New vehicle sales

24000
22000 1500
Answers

20000 1400
18000 1300
1200
16000
1100
14000
1000
12000

W n
Su ring

Sp ter
W n

W n
ut r

ut r
Su ing

g
Sp er

Sp er
A er

um
A me

A me
um

um

rin
10000

t
m

in
in

in
r
m

m
m
ut
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Su
Month
Quarter
New vehicle sales in Queensland in 2016 g Gradient = 45.01. On average, the number
varied between about 16 500 and 19 500 in of purchases increases by about 45 each
most months, with a small increase in sales in quarter.
March, and a much larger increase in sales in h Seasonalised predicted purchases for
June (27 270). summer 2020 = 2212.9
2 a i R2 = 70.1%. 70.1% of the variation in the
2500
purchases is explained by the linear relation-
Number of purchases

2000 ship between the number of purchases and

1500 quarter.
3 a b&c
1000 14
500 13
% youth unemployed

0 12
W mn

W mn

W mn
A mer

A mer

A mer

11
Sp er

Sp er

Sp er
Su ing

Su g

g
rin

rin
t

t
u

u
in

in

in
m

m
r
ut

ut

ut

10
Su

Quarter
9
b i Summer = 1.04 ii Spring = 0.52 8
c
7
2006 2008 2010 2012 2014 2016 2018
Summer Autumn Winter Spring Year
2016 1327 1415 1415 1385 d From the smoothed graph we can see that
the % of youth unemployment has increased
2017 1492 1539 1582 1394
steadily over the years 2007–2016.
2018 1874 1727 1654 1904 4 a $4600 b $5080
c i 0.860 ii $3500
d
2000
1900 Complex familiar question
Number of purchases

1800
1700 5 a
1600 1700
1500
Average weekly earnings

1600
1400
1300 1500
1200 1400
1100 1300
1000
1200
W n
Su ing

Sp ter
W n

W n
ut r

ut r
Su ing

g
Sp er

Sp er
er

um
A me

A me
um

um

rin
t

t
m

in
r
in

in
r

1100
m

m
m
ut
Su

1000
Quarter
May‐10
May‐07

May‐08

May‐09

May‐11

May‐12

May‐13

May‐14

May‐15

May‐16
Nov‐08

Nov‐09

Nov‐10

Nov‐11

Nov‐12

Nov‐13

Nov‐14

Nov‐15

Nov‐16
Nov‐07

Time period

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 Answers 577  

Answers
b Complex unfamiliar question
Centred 2-point
moving average 6 a
2000
May-07

GDP Australia
1500
Nov-07 1149.4 1000

May-08 1176.2 500

0
Nov-08 1207.0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

6B Topic 2
Year
May-09 1239.3 From the plot we can see that GDP rose
Nov-09 1272.2 slowly but steadily over the years 1980 to
2002. From here, GDP started to rise rapidly
May-10 1301.5 until 2013, when it began to decrease. In
Nov-10 1328.8 2017, GDP started to rise again.
b i GDP = −23 848.3 + 12.121 × year
May-11 1358.7
ii
Year Percentage error
Nov-11 1388.0
1990 18.9%
May-12 1418.7
2000 1.4%
Nov-12 1452.9
2010 142.7%
May-13 1480.8
2015 113.7%
Nov-13 1499.6
2017 131.8%
May-14 1518.5
iii The equation provides a reasonable
Nov-14 1535.5
prediction over the years where the
May-15 1546.5 relationship has the same linear pattern
as that of the data used to determine the
Nov-15 1559.0
equation.
May-16 1575.7 c i GDP = −164 131 + 82.226 × year
ii
Nov-16 Year Percentage error
c average weekly earnings = 1115.69 + 2010 9.3%
+ 25.786 × time period
2015 −20.9%
d Predicted = $1657.20, which ­overestimates
the actual value by $51.60. 2017 −19.1%
e From the graph we can see that average
iii Again, the equation provides a
weekly earnings appeared to increase at
­reasonable prediction over the years
a steady rate from May 07 to Nov 13.
where the relationship has the same
Fitting a regression line to this data
linear pattern as that of the data used to
showed an average increase each period of
determine the equation.
$29.84. From May 14 to Sept 16 the rate
d i GDP = −50 493.2 + 25.527 × year
of increase slowed. Fitting a regression
ii
line to this data confirmed this change, Year Percentage error
showing an average increase of $14.58 per
2010 53.1%
period.
2015 30.3%
2017 39.7%

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 578 Answers
6B Topic 2 → 6C Topic 3

iii This equation is not a good predictor b Ln = 15 + 5n c 65 metres

because the relationship is not linear 2 a Nn+1 = 1.22Nn, N1 = 1654
over the range of the data used. b
e Comparison of each of the models Start of 1 2 3 4 5
shows that the first two models are not year
­unreasonable if used only for short term
predictions but becomes very unreliable Number 1654 2018 2462 3004 3665
when used to extrapolate too far from the of deer
data used for determining the equation. The c
third model is not reliable at all because the Nn
-
relationship does not follow the same linear
pattern over the range of the data used. 4000

Problem-solving and modelling

3000
7 Answers will vary.
8 Answers will vary. 2000
Answers

6C Topic 3 Growth and decay in 1000

sequences
n
0 1 2 3 4 5
Multiple-choice questions
d 7 years
1 C 2 D 3 E 4 B 5 D 3 a   i Vn = 2 500 000 − 200 000n
Short-answer questions ii 2 300 000, 2 100 000, 1 900 000,
1 700 000, 1 500 000
Simple familiar questions iii
un
1 51 2 310 3 4096 +

4 162 5 98 911
6 tn = 525 − 25n 2 500 000
2 300 000
7 t1 = 5, t2 = 13, t3 = 21 2 100 000
1 900 000
8 t1 = 2, t2 = 10, t3 = 50 1 700 000

9 n = 29
10 t1 = 8, t2 = 19.25, t3 = 30.5
11 tn = 815 − 15n
12 tn = 2 × 6n– 1
n
13 $249 445 0 1 2 3 4 5

Complex familiar questions b   i Un = 2 500 000 (0.9) n

ii 2 250 000, 2 025 000, 1 822 500,
14 –15 1 640 250, 1 476 225
15 20 iii
16 a Vn = 48 000 × 0.92n Vn
+
b $29 105
c $16 364 2 500 000
17 a Vn = 25 550(1 + 0.16n) 2 250 000
2 025 000
b $37 740 1 822 500
1 640 250
c 7 years 1 476 225
18 a Cn = 5000 + 0.02n
b $7400
c 250 000
n
Extended-response questions 0 1 2 3 4 5
Complex unfamiliar questions c i   Method 1
1 a Ln+ 1 = Ln + 5, L1 = 20 ii Method 2

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 Answers 579  

Answers
6D Topic 4 Earth geometry and time g –2, –1, 2, 11, 38
h –10, 35, –100, 305, –910
zones
4 a 12, 57, 327, 1947, 11 667
Multiple-choice questions b 20, 85, 280, 865, 2620
1 B 2 B 3 E 4 E c 2, 11, 47, 191, 767
d 64, 15, 2.75, –0.3125, –1.078125
Short-answer questions e 48 000, 45 000, 42 000, 39 000, 36 000
Simple familiar questions f 25 000, 21 950, 19 205, 16 734.5, 14 511.05
5 a A0 = 4, An+1 = An + 2

6D Topic 4 → 7B
1 4114 km
b A0 = 24, An+1 = An − 4
2 15 038 km
c A0 = 2, An+1 = 3An
3 a 264o b 17.6 hours A
c 11:36 a.m. the next day d A0 = 50, An+1 = n
5
4 a 5727 km b 4281 km e A0 = 5, An+1 = 2An + 3
c 15 735 km f A0 = 18, An+1 = 0.8An + 2
Complex familiar questions 6 4 7 8

5 140oE, 22oN
Exercise 7B
6 4838 km
7 a 35 670 km b 25 190 km 1 a A0 = 2000, An+1 = An + 50
8 a 11 120 km b 15 330 km b A0 = 6000, An+1 = An + 252
c 4210 km c A0 = 25 000, An+1 = An + 1600
9 0°, 26.5°W 2 a 0.006 b 0.0093 c 0.0031
d 0.0052 e 0.019 f 0.0261
Extended-response questions 3 a 3.75% b 6.4% c 9.6%
Complex unfamiliar questions d 11.28% e 6.12% f 10.92%
1 a 556 km b 481.5 km 4 a A0 = 5000, An+1 = 1.084An
c 26oN or 26oS b A0 = 8500, An+1 = 1.042An
2 a 7690 km b 7760 km c 70 km c A0 = 26 000, An+1 = 1.126An
d 3 hours 40 minutes. A is ahead of B 5 a A0 = 2000, An+1 = 1.007An
b A0 = 24 000, An+1 = 1.0064An
c A0 = 16 000, An+1 = 1.0168An
Chapter 7 d A0 = 2800, An+1 = 1.0124An
e A0 = 34 000, An+1 = 1.0018An
Exercise 7A
f A0 = 18 000, An+1 = 1.0024An
1 a 2, 8, 14, 20, 26 6 a 1 year: $2076, 2 years: $2152, 3 years: $2228
b 5, 2, –1, –4, –7 b 14 years
c 1, 4, 16, 64, 256 7 a 1 year: $7518, 2 years: $8036, 3 years: $8554
d 10, 5, 2.5, 1.25, 0.625 b 6 years
e 6, 14, 30, 62, 126 8 a 1 month: $6028.80, 2 months: $6057.74,
f 12, 9, 7.5, 6.75, 6.375 3 months: $6086.82
2 a 4, 6, 8, 10, 12 b $86.82 c $28.94 d 7 months
b 24, 20, 16, 12, 8 9 a 1 month: $8488.20, 2 months: $8577.33,
c 2, 6, 18, 54, 162 3 months: $8667.39
d 50, 10, 2, 0.4, 0.08 b $88.20 c $89.13 d $267.39
e 5, 13, 29, 61, 125 e 11 months
f 18, 16.4, 15.12, 14.096, 13.2768 10 a 0.5%
3 a 2, 5, 8, 11, 14 b A0 = 7600, An+1 = 1.005An
b 50, 45, 40, 35, 30 c $7830.87
c 1, 3, 9, 27, 81 11 a 2%
d 3, –6, 12, –24, 48 b A0 = 3500, An+1 = 1.02An
e 5, 9, 17, 33, 65 c $3788.51
f 2, 7, 17, 37, 77 d $312.30

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 580 Answers
7C → 7 review

Exercise 7C 2 a Weekly b $1.46

3 a Quarterly b $9.13
1 a
Principal: $12 000
Exercise 7D
Annual interest rate: 5.2%
1 a 6.38% b 8.76% c 4.91%
Compounds per year Balance after 1 year
d 13.10% e 7.64%
1 $12 624.00 2 a More compounds earn more interest
b 4.68%
2 $12 632.11
c 4.70%
4 $12 636.27 d More frequent compounds (monthly) has
Answers

12 a higher effective interest rate.

$12 639.09
3 a Fewer compounds charge less interest
52 $12 640.18 b 8.25%
c 8.24%
b
d Less frequent compounds (monthly) has
Principal: $25 000 a lower effective interest rate.
Annual interest rate: 9.4% 4 a A: 8.62% B: 8.11%
Compounds per year Balance after 1 year b A: $3018.10 B: $2837.08
c Luke should choose loan B as he will pay
1 $27 350.00 less interest than with loan A.
2 $27 405.23 5 a A: 5.43% B: 5.61%
b A: $7602.92 B: $7860.27
4 $27 434.14
c Sharon should choose investment B as
12 $27 453.94 she will earn more interest than with
­investment A.
52 $27 461.66

c
Exercise 7E
Principal: $67 500
Annual interest rate: 5.7% 1 a $2771.79 b $16 751.89
c $6377.17 d $32 709.21
Compounds per year Balance after 1 year e $9785.98 f $16 563.11
1 $71 347.50 2 a $8500 b $24 000 c $35 000
d $6400 e $31 000
2 $71 402.33
3 a 4.14% b 6.12% c 6.12%
4 $71 430.52 d 5.28% e 4.92%
4 6 years
12 $71 449.62
5 4.90%
52 $71 457.04 6 50 years
7 48 quarters
d
8 4.00%
Principal: $180 000 9 6.25%
Annual interest rate: 3.47%
Compounds per year Balance after 1 year
Chapter 7 review
1 $186 246.00
Multiple-choice questions
2 $186 300.18
1 B 2 C 3 C 4 A
4 $186 327.75 5 B 6 D 7 E 8 D
12 $186 346.30 9 B 10 C

52 $186 353.48

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 Answers 581  

Answers
Short-answer questions 4 a $2300.00
1 a A0 = 12 500, An+1 = 1.0065An b 17.68%
b $12 828.18 c i $2428.36
2 a 1 month: $5832.48 ii $128.36
2 months: $5865.14 iii $443.98
3 months: $5897.99 5 a
b 7 months Month Quarterly Monthly
3 a $1600 compounds compounds

7 review
b 18.2%
c One week: $1605.60, two weeks: $1611.22, 1 $2526.00
three weeks: $1616.86 2 $2552.27
d 9 weeks
4 a 3.8% 3 $2578.00 $2578.81
b A0 = 2200, An+1 = 1.038An 4 $2605.63
c $2553.95
5 a $16 411.74 5 $2632.73
b $1411.74 6 $2658.43 $2660.11
6 a $1528.33
b $28.33 7 $2687.78
7 18.6% 8 $2715.73

Extended-response questions 9 $2741.38 $2743.97

1 a Bank A: 6.45% per annum Bank B: 6.27% 10 $2772.51
per annum
b Bank A. It has the largest effective rate of 11 $2801.35
interest and will earn more interest in one 12 $2826.91 $2830.48
year than Bank B.
c $9 b i
2 a Bank A. It has the largest effective rate Vn
of interest (8.37% per annum compared 2850
to 8.35% per annum) and will earn more 2800
­interest in the time of the investment. 2750
b $7 2700
3 a i $15 701.99 2650
ii $15 704.73 2600
iii $15 705.80 2550
2500 n
b Effective annual rate of interest 0 1 2 3 4 5 6 7 8 9 10 11 12 13
c The weekly compounding investment has
the highest effective annual rate of interest. ii The table shows that Lucille will pay
It will earn more interest than the other more with monthly compounds com-
compounding frequencies and so will have pared to quarterly compounds. The
the most benefit to Eva. This can be seen graph of monthly compounds is higher
by the fact that her account will be the on the axes than that for quarterly
highest after one year if she has weekly compounds.
compounding. c $3.57

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 582 Answers
8A → 8B

Chapter 8 2 a

Repayment Repayment Interest Principal Balance

Exercise 8A number amount paid reduction of loan
1 a i A0 = 6500, An+1 = 1.14An − 1800 0 0 0 0 2000.00
ii $3438.76
1 100.00 7.00 93.00 1907.00
b i A0 = 14 000, An+1 = 1.028An − 2000
ii $9039.67 2 100.00 6.67 93.33 1813.67
Answers

c i A0 = 22 000, An+1 = 1.018An − 1000 3 100.00 6.35 93.65 1720.02

ii $20 155.19
d i A0 = 85 000, An+1 = 1.0067An − 1800 4 100.00 6.02 93.98 1626.04
ii $81 283.71 5 100.00 5.69 94.31 1531.73
e i A0 = 150 000, An+1 = 1.0054An − 1700
b     i    $20.02 ii    $26.04
ii $147 315.56
f i A0 = 245 000, An+1 = 1.0016An − 1200 3
ii $242 572.12
Repayment Repayment Interest Principal Balance
2 a $600 b $1201.44 number amount paid reduction of loan
c $501.44
3 a $860 b $868.19 0 0 0 0 4600.00
c $168.19 1 300.00 18.40 281.60 4318.40
4 a 8.64% b $10 282.98
2 300.00 17.27 282.73 4035.67
c $282.98
5 a 11.4% b $4717.02 3 300.00 16.14 283.86 3751.81
c $217.02 4 450.00 15.01 434.99 3316.82
6 a A0 = 20 000, An+1 = 1.0059An − 600
5 450.00 13.27 436.73 2880.09
i $17 561.39
ii $561.39 Balance after five repayments = $2880.09
b A0 = 20 000, An+1 = 1.0059An − 800 4
i $16 549.52
Repayment Repayment Interest Principal Balance
ii $549.52 number amount paid reduction of loan
c $11.87
0 0 0 0 7500.00
Exercise 8B 1 $300.00 71.25 228.75 7271.25
1 a 2 $300.00 69.08 230.92 7040.33

Repayment Repayment Interest Principal Balance 3 $600.00 66.88 533.12 6507.21

number amount paid reduction of loan 4 $600.00 61.82 538.18 5969.03
0 0 0 0 8400.00 5 $600.00 56.71 543.29 5425.74
1 500 79.80 420.20 7979.80 Balance after five repayments = $5425.74
2 500 75.81 424.19 7555.61 5 a    i $14 680.68
ii   Too much would be paid with the final
3 500 71.78 428.22 7127.39 payment at the end of the 11th month.
4 500 67.71 432.29 6695.10 It must be less than normal at $2086.82
iii $516.82
5 500 63.60 436.40 6258.70
b i $1194.53 ii $494.53
iii $22.29
b $358.70 c Better to be made as repayment number 1.
It would save the most interest because the
payment was made earlier in the term of the
loan.

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 Answers 583  

Answers
Exercise 8C 2 a $51 800.72 b $4200.72
c $29 134.15
1 a $6061.91 b $12 095.13
3 a 307 months b 145
c $168 519.40 d $45 196.78
4 a 159 months b $1327.00
e $33 735.99
5 a i $135 481.70 ii $34 741.70
2 a $33.16 b $7674.57
b i $113 840.36 ii $21 641.34
c $19 088.26 d $58 652.52
iii Nicholas will be charged interest on the
e $26 369.97
outstanding balance of his loan every
3 a $857.09 b $88 076.01

8C → 9A
month. He should reduce the outstanding
4 a $2616.00 b 56 months
balance of his loan as soon as possible in
5 a 55 months b $3124.12
order to minimise the interest that he is
6 a $349.43 b $32 437.90 c $418.66
charged.
c $1058.37 d $1070.48
Chapter 8 review e The balance of Nicholas’ loan after each
year of the loan is shown in the table below.
Multiple-choice questions
1 B 2 A 3 E 4 B 5 C n interest rate balance after
6 B 7 C 8 E 9 A 10 D for year n n years

1 4.5 $156 654.27

Short-answer questions
2 4.55 $148 003.11
1 a $9500
b $250.00 3 4.6 $139 023.50
c $8188.07 4 4.65 $129 690.86
2 a 0.49%
b A0 = 250 000, An+1 = 1.0049An − 2400 5 4.7 $119 914.88
c $242 863.07
d 9 If Nicholas chooses the fixed interest
3 a $3500 home loan, with the maximum affordable
b $600.00 ­repayments of $1300 per month, his balance
c i 0.92% ii 11.04% after 10 years would be $63 537.41.
d $613.87 If he chooses the variable interest home
4 a loan, with maximum affordable ­repayments
of $1300 per month and with annual
Repayment Repayment Interest Principal Balance of increases of 0.05% in the interest rate each
number amount paid reduction loan year, the balance would be $64 671.89.
0 0 0 0 125 000.00 If Nicholas was not intending to make lump
sum payments, the best loan for him to take
1 1000.00 387.50 612.50 124 387.50 would be the fixed rate loan as he would pay
2 1000.00 385.60 614.40 123 773.10 the loan out after a shorter time and pay less
interest.
3 1000.00 383.70 616.30 123 156.80
4 1000.00 381.79 618.21 122 538.59

b $109 763.84
Chapter 9
5 a $72 923.58
Exercise 9A
b $923.58
6 3.95% 1 a i A0 = 0, An+1 = 1.025 × An + 5000
ii $15 378.13
Extended-response questions b i A0 = 0, An+1 = 1.016 × An + 6500
ii $19 813.66
1 a $1500 b $11 943.00
c $2463.37

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 584 Answers
9A → 9B 

c i A0 = 320 000, An+1 = 1.009 × An + 8000 Exercise 9B

ii $352 934.64
1 a
d i A0 = 460 000, An+1 = 1.0058 × An + 4200
ii $480 723.73 Deposit Deposit Interest Principal Balance
number increase of annuity
e i A0 = 845 000, An+1 = 1.0041 × An + 7500
ii $878 028.55 0 0 0 0.00 50000.00
f i A0 = 1 250 000, An+1 = 1.0012 × An + 2700
1 4000.00 400.00 4400.00 54400.00
Answers

ii $1 262 615.13
2 a i A0 = 120 500, An+1 = 1.028 × An − 8000 2 4000.00 435.20 4435.20 58835.20
ii $106 229.79 3 4000.00 470.68 4470.68 63305.88
b i A0 = 276 000, An+1 = 1.0126 × An − 4600
ii $272 590.20 4 4000.00 506.45 4506.45 67812.33
c i A0 = 358 000, An+1 = 1.0143 × An − 25 000 5 4000.00 542.50 4542.50 72354.83
ii $297 501.26
b
d i A0 = 440 000, An+1 = 1.0036 × An − 5000
ii $429 715.06 Deposit Deposit Interest Principal Balance of
number increase annuity
e i A0 = 845 000, An+1 = 1.0067 × An − 9600
ii $833 105.16 0 0 0 0.00 135000.00
f i A0 = 1 360 000, An+1 = 1.0015 × An − 2900
1 1200.00 486.00 1686.00 136686.00
ii $1 357 416.13
3 a The recurrence relation has a value 2 1200.00 492.07 1692.07 138378.07
­subtracted at the end. 3 1200.00 498.16 1698.16 140076.23
b $1030.00 c $2030.50 d $120.50
4 1200.00 504.27 1704.27 141780.50
4 a  The recurrence relation has a positive value
added at the end. 5 1200.00 510.41 1710.41 143490.91
b $300 c $7666.58 d $166.58
2 a
5 a i 2.16% ii  $62 942.44
b i $7500 ii $62 942.44 Payment Payment Interest Principal Balance of
iii $25 875.72 number withdrawn reduction annuity
c i $442.44 ii $433.28 0 0 0 0 25 000.00
iii $875.72
1 1000.00 143.75 856.25 24 143.75
6 a i 3.72% ii $269 729.13
b i $1800 ii $269 729.13 2 1000.00 138.83 861.17 23 282.58
iii $266 828.64 3 1000.00 133.87 866.13 22 416.45
c i $2479.13 ii $2499.51
iii $4978.64 4 1000.00 128.89 871.11 21 545.34
7 a A0 = 125 000, An+1 = 1.0013 × An + 695 5 1000.00 123.89 876.11 20 669.23
b 6
c $1502.75 b
8 a A0 = 32 000, An+1 = 1.0036 × An − 3500 Payment Payment Interest Principal Balance of
b 4 number withdrawn reduction annuity
c 9
0 0 0 0 380 000.00
d $1094.43
e $1098.37 1 12 000.00 4560.00 7440.00 372 560.00
9 a A0 = 54 000, An+1 = 1.0064 × An + 1500 2 12 000.00 4470.72 7529.28 365 030.72
b $65 252.30
3 12 000.00 4380.37 7619.63 357 411.09
c A0 = 65 252.30, An+1 = 1.0063 × An − 1800
d $4586.48 4 12 000.00 4288.93 7711.07 349 700.02

5 12 000.00 4196.40 7803.60 341 896.42

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 Answers 585  

Answers
3 a $164 000.00 b 5.8% 2 a A0 = 345 000, An+1 = 1.0115 × An–12 000
c $155 822.47 d $747.95 w b $295 397.96 c $22 397.96
e $2765.26 3 a $84 000.00 b $14 500.00
f i 3805.16 ii $3805.16 c i 0.47% ii 5.64%
g d $12 888.23
6 3500.00 721.46 2778.54 147 526.62 4 $16 528.65
5 a $97 222.22 b 5.83%
7 3500.00 708.13 2791.87 144 734.75

9B → 10A
Extended-response questions
Exercise 9C 1 a $5250
1 a $6477.82 b $12 118.63 b $441
c $101 846.82 d $39 905.39 c i $5335.88 ii $57 934.44
e $11 058.58 2 a $2460
2 a $144 226.52 b $295 234.80 b $191.88
c $327 661.26 d $428 306.28 c i $27 519.87 ii $60 960.18
e $234 134.63 d i $7732.89 ii $2649.34
3 a 58 b $430.43 3 a $720.00
c $10 380.43 b i A0 = 150 000, An+1 = 1.0048 × An–2000
4 21 ii $142 227.25 iii 16
5 a 120 c i 36 ii $1850.89
b i $474.81 ii $474.29 4 a $496 000.00 b $69 623.14
c $16 976.68 c 86 d $2047.67
6 a $412 000.00 b $65 662.50 5 a 112 b $334 651.73
7 a 5.27% b $396 300.89 c 89 d $1554.55
c 487 d 5 6 a $2941.59
b 8% of $1800 is more than 8.2% of $1600
Exercise 9D and so Byron will have more deposited into
1 a $4791.67 b $4791.67 his superannuation account each fortnight
2 a $9790.50 b $642 000 with Option 1.
3 a Verified b 3.125% c i $102 107.91 ii $22 275.91
7 a $314 296.20 b $7029.52
Verified

d
P=
i
=
2500 Chapter 10
0.025
= 100 000 Exercise 10A
4 a $18 518.52 b 4.17%
1 a i 3 ii 2 iii 1
c Verified
b i 7 ii 14
5 a $10 000
iii Verified as 14
b i $87.50 ii 0.875% iii 3.5%
c Two answers are possible, as shown below.
c No impact
town C town C
Chapter 9 review
Multiple-choice questions
town D town D
1 A 2 B 3 D 4 E 5 C
6 C 7 B 8 D 9 D 10 C

Short-answer questions town H    town H

1 a $624 000 b $2500 c $613 834.21 d H and D

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 586 Answers
10A → 10B

2 a Chelsea b Wayne Exercise 10B

c Samantha
1 a A  B   C  D
d i deg(Samantha) = 4 A 0 1 1 0

[ ]
ii deg(Eli) = 4 B 1 0 1 1
3 Many different answers are possible. One C 1 1 0 0
possibility for each is shown. D 0 1 0 0
aa b
b b A B   C    D
A 0

[ ]
1 1 0
B 1 0 0 1
Answers

C 1 0 0 1
D 0 1 1 0
c A B    C   D
A 0

[ ]
1 0 0
cc d
d B 1 0 0 0
C 0 0 0 1
D 0 0 1 0
d A B   C   D
A 0

[ ]
1 1 1
B 1 0 1 1
C 1 1 0 1
D 1 1 1 0
4 a Lions Leopards e A B C   D    E    F
A

[ ]
0 1 1 0 0 0
B 1 0 0 1 0 0
Eagles
C 1 0 0 1 0 0
Warthogs Small D 0 1 1 0 0 0
Impala birds E 0 0 0 0 0 1
F 0 0 0 0 1 0
Flies
Lizards
f     A    B   C  D
b deg(Warthog) = 2 A 0 0 0 0

[ ]
c Multiple answers are possible. Two of these B 0 0 0 1
are shown below. C 0 0 0 2
D 0 1 2 0
Eagles
2 a        A  B  C
Small A 0 1 1

C[ 0 0 0 ]
birds B 1 0 1

Flies b       A  B   C  D
Lizards A 0 0 1 0

[ ]
B 1 0 0 1
Eagles
C 0 1 0 0
Small D 0 1 1 0
birds c   M N  P  Q
M 0

[ ]
1 0 1
Flies
Lizards N 1 0 0 0
5 a P 0 1 0 0
Q 0 0 1 1
d      E      F   G   H
E 0 1 0 1

[ ]
F 1 0 1 0
G 0 1 0 1
b 15 H 0 0 1 0

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 Answers 587  

Answers
e A   B   C  D  E c

[ ]
A 0 1 1 0 0 P Q
B 0 1 0 1 0
C 1 1 0 1 0
D 0 0 0 0 1
E 0 0 1 1 0
S R
f   A   B   C   D  E    F
A

[ ]
0 1 0 0 0 0 d
B 0 0 1 1 0 0 Q

10B → 10D
C 1 0 0 1 0 0 P
D 0 0 0 0 0 0
E 0 0 1 1 0 0
F 0 0 0 0 1 0
3 a A C
S R

Exercise 10C
1 a i b ii c ii
B
2 a B
b B A C
A

F
E D
b A B

D C
C E
c A B D
D
c
C
E

D C B F
4 a
C A
A
d not possible
3 a v = 8, e = 12, f = 6
b v = 6, e = 12, f = 8
c v = 7, e = 12, f = 7
4 a f= 4 b v = 12
B
c f = 11 d e = 19
b S
Exercise 10D
T 1 a path b trail
c path d closed walk
e trail f path
U
2 a closed path or cycle b open walk only
c open walk only d trail
e closed walk
f closed path or cycle

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 588 Answers
10E → 10 review

Exercise 10E Short-answer questions

1 a 3 b 2 c A and D
1 a i Semi-Eulerian
d A
ii E–A–B–E–D–B–C–D–A
b i Neither B
c i Semi-Eulerian
ii A–C–E–C–B–D–E–F
d i Eulerian
ii A–B–C–E–D–C–A C
e i Eulerian D
ii E–F–D–E–A–B–D–C–B–E
2      A   B  C   D
2 a A:4, B:2, C:5, D:2, E:4, F:4, G:3
A 0 1 1 1

[ ]
b i C or G
Answers

B 1 0 1 1
ii G or C C 1 1 0 1
c i C and G D 1 1 1 0
ii Eulerian trail
3 A B
Exercise 10F
1 a i A–B–C–F–I–H–E–G–D
ii E–G–D–A–B–C–F–I–H–E
b i A–B–C–D–E–F
ii E–F–A–B–C–D–E
D C
c i A–B–D–C–E
ii E–A–B–D–C–E
4 a Mackay Masters and Gladstone Gladiators
2 F–A–B–C–D–E–H–G
b 2
3 a 5
c Bundaberg Braves
b i Hamilton path
5 a 4 b 6
ii E–W–D–C–B–A–F
c 8 d 4 + 6–8 = 2
6 a C and D b 12 hours
Exercise 10G c 13 hours
1 a D and E
b 17 minutes Extended-response questions
c 8 minutes 1 a It can be drawn so that none of the edges in
d 36 minutes (A–B–C–D–E) the graph cross over each other.
2 11 b v + f + e = 9 + 7 − 14 = 2
3 a 34 km c 750 m
b 56 km d i Yes, all vertices have even degrees and so
c Two answers are possible: the graph is Eulerian.
A–E–F–G–I or A–C–F–G–I ii Multiple answers possible. One is:
4 19 km Office–C5–C7–C8–C6–C5–C4–C3–C2
–C4–C1–C2–C8–C1–office
e i Hamiltonian cycle
Chapter 10 review ii C7 to park office. Other answers
possible.
Multiple-choice questions iii Office–C1–C2–C3–C4–C5–C6–C8–C7–office,
or same route in reverse order. Other
1 A 2 C 3 D 4 A 5 D
answers possible.
6 C 7 A 8 B 9 B 10 B

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 Answers 589  

Answers
2 a i B 3 Multiple answers possible.
6 9 a
C
A 8 D 4
5 F 7
4 5
8 5
b
E
ii   A   B   C  D  E     F

10 review → 11A
A 0 1 0 1 1 1

[ ]
B 1 0 1 0 0 0
C 0 1 0 1 1 0 c
D 1 0 1 0 1 1
E 1 0 1 1 0 1
F 1 0 0 1 1 0
b i 45 km (at minimum)
4 a 6
ii Some vertices are visited more than
b 5
once.
5 4
iii F − E − D − C − B − A − F 3 4
2

iv 33 km (for route above; other answers 3 3

2 2
possible) 6
c F and C 3

3 a 7 b 2 Note: other answers are possible

c B c 22, 20
A Note: other answers are possible
5 a 2
A B 2 E
3 F
C D 2
1 10
d Vertices are not all even. C D
4 a Park Entrance – Information Centre –
Boathouse – Campsite – Lookout – Park b C
B
Entrance. 16
Park Entrance – Lookout – Campsite – E 16
A D
Boathouse – Information Centre – Park 12 11
10
Entrance. 15 80
G F
b Yes. There are exactly two vertices that have
an odd degree. c 18 C
B
c i 30 minutes
10
ii 2 hours and 45 minutes
10 9
E
Chapter 11 A D 47
d D
Exercise 11A H
70
1 a 11 b 9 C 100 200 G
c Multiple answers possible 100
80 90
F
B
90
730
A

2 A, B, D 6 44
7 94

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 590 Answers
11B → 11 review

Exercise 11B c Jason – Rugby, Diana – Hockey, Rob –

Soccer, Janet – Squash, Tara – Cricket
1 a 
There are two distinct groups for vertices,
4 Joe – C, Meg – A, Ali – B
people and ice-creams that must be matched
5 Stars – Away, Champs – Home,
together.
Wests – Neutral
b Chocolate
Gloria Stars – Away, Champs – Neutral,
Vanilla Wests – Home
Minh
Cost = $20 000
Carlos Peppermint 6 A – Y, B – Z, C – X, D – W
7 a W – D, X – A, Y – B, Z – C
Trevor Butterscotch b Minimum cost = 11, one possible allocation
Answers

is W – B, X – C, Y – D, Z – A
Strawberry 8 A – Karla, B – Raj, C – Mark, D – Jess
c 5 A – Mark, B – Karla, C – Raj, D – Jess
d Gloria
Distance = 55 km
e Gloria – Vanilla, Minh – Strawberry,
9 Dimitri – 800 m, John – 400 m, Carol – 100 m,
Carlos – Peppermint, Trevor – Chocolate
Elizabeth – 1500 m
2 a Joni Maths
Exercise 11C
Ian English 1 Cut C1 – 14, Cut C2 – 12, Cut C3 – 21
2 Cut C1 – 12, Cut C2 – 16, Cut C3 – 16
3 a 9 b 11 c 8 d 18
Dylan Geography 4  ut A – 14, Cut B – 23, Cut C − 12, Cut
a C
D – 16, Cut E – not a cut
b It does not completely separate the source
Joshua Science from the sink.
b Ian is the only teacher who can teach Maths c 12
and so he cannot teach Science. Joshua
is the only other teacher who can teach Chapter 11 review
Science and so he must take this class.
c Ian – Maths, Joshua – Science, Dylan – Multiple-choice questions
English, Joni – Geography
1 B 2 C 3 A 4 D 5 C
Ian – Maths, Joshua – Science, Dylan – 6 E 7 D 8 A 9 C 10 A
Geography, Joni – English
3 a Rob Hockey Short-answer questions
1 a 3
Janet Cricket b D and G, E and F
c A C A
C
Tara Soccer B B
F F
E D E
D
Diana Rugby G G

2
8 7
Jason Squash
3 4

b Jason can only coach Rugby and so Diana 5

cannot. The only other sport Diana can 4
coach is Hockey.

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 Answers 591  

Answers
3 a 2 b Audrey b i A Office
20 20
c Audrey – Natives, Brian – Aloes, Cameron –
Cactus, Daphne – Grasses
4 a Word 20
David
processing B
40
40 15
Robyn Editing

C D

11 review → 12A
Linda Printing 30

Anthoney Mailing ii $44 000

c i Office
A
b David – Printing, Robyn – Mailing, Linda – 20
Editing, Anthony – Word processing
5 a Julia b Mario
20
c Julia – Assembling, Mario – Painting,
B
Sylvana – Preparing, George – Cutting 15
6 a 26 b 20
C D
Extended-response questions 30
1 490
or
2 8
A 20 Office
a 9 a.m. 20
Bernard

Georgia 10 a.m.
B
15

Chris 1 p.m.
C D
30
Arthur 3 p.m.
ii $20 400
b Chris d i 2.5 minutes
c Bernard – 10 a.m., Georgia – 9 a.m., Chris – ii 3.5 minutes
1 p.m., Arthur – 3 p.m.
3 Ann – D, Bianca – B, Con – C, David – E
4 a 600 litres per minute Chapter 12
b 72 000 L c 4.5 min
5 a i 4 Exercise 12A
ii A 20 Office 1 a
20 Immediate
35 Activity Predecessors
60
20 30
20 A –
40 B 30
15 B –
40
C A
45 35 D
C D A
30
E B, C
iii A, B, D
F D
G E

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 592 Answers
Answers 12A 

b e
Immediate Immediate
Activity Predecessors Activity Predecessors
P – P –
Q P Q –
R P R P
S Q S P
T Q T Q
U S, V U R
V R V S
W R W S, T
X T, U X U
Y W
c
Immediate
Z V, X, Y
Activity Predecessors
J – f
Immediate
K – Activity Predecessors

L J A –

M N B A

N K C A

O K D A

P N E B

Q L, M F C, D

R P G D

S O, R H E, F, G

T Q I G
J I
d
Immediate K H
Activity Predecessors
2 a B D
A –
A
Start Finish
B –
C E
C A
D A b P R
T
E B, D Start Finish
F C, E Q S

G D, B c
T V Finish
H B X Y
Start Z
U W

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 Answers 593  

Answers
d F I d i B: 4, D: 3
G L
Start J Finish ii B: 4, D: 3
K
4 a
H 3 4 12 12
B, 8
3 a A, 3 E, 10
H 0 0 D, 12 42 42
F Start Finish
y I C, 7 F, 20
Start mm 22 22
Du

12A → 12B
Finish b 42
G
J c D−E−F
b d i A: 1, B: 4, C: 15
D ii B: 1, A: 1, C: 15
B
A Dummy Finish 5 a
Start E
C Activity Duration EST LFT LST Float

c A 10 0 11 1 1
R
U B 9 0 9 0 0
P
Dummy Finish
Start S C 3 0 17 14 14
V
D 2 10 13 11 1
Q
T
E 4 9 13 9 0
d
F 1 13 14 13 0
D
B G
H Finish G 1 13 15 14 1
A
Start Dummy
H 3 14 17 14 0
F
C
E I 2 14 17 15 1
J 1 17 18 17 0

b B−E−F−H−J
Exercise 12B
6 a
1 a 38 S, 3
b 8 P, 4 U, 3
c 9 Q, 5 T, 6 W, 8 Y, 6
Start Finish
d 26 Dummy
e i 18 ii EST is not the same as LST X, 13
R, 12 V, 4
f A
2 a 3 b 5 c 2 b
d 13 e A−C 4 15 S, 3 7 18
3 a
4 4
P, 4 U, 3
Q, 5 T, 6 W, 8 29 29 Y, 6
A, 4 Start Finish
C, 4 5 15
0 0 0 0 12 21 35 35
E, 2 10 10 F, 3 Dummy X, 13
Start Finish R, 12
D, 5 V, 4
8 8 13 13
B, 6 Dummy 12 12 16 16
6 10 c 35 weeks
b 13 d R–V–X–Y
c A–C–E–F

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 594 Answers
12B → 12C

e e
Activity Duration EST LFT LST Float Activity Duration EST LFT LST Float
P 4 0 15 11 11 I 2 0 11 9 9
Q 5 0 15 10 10 J 3 0 6 3 3
R 12 0 12 0 0 K 5 0 5 0 0
S 3 4 18 15 11 L 4 2 15 11 9
Answers

T 6 5 21 15 10 M 8 6 15 7 1
U 3 7 21 18 11 N 1 5 6 5 0
V 4 12 16 12 0 O 6 14 21 15 1
W 8 12 29 21 9 P 6 6 22 16 10
X 13 16 29 16 0 Q 7 6 13 6 0
Y 6 29 35 29 0 R 5 5 13 8 3

f Verified. The activities with zero floats S 1 20 22 21 1

­correspond to the path, thus it is verified. T 9 13 22 13 0
7 a
L, 4 f Verified
I, 2
O, 6
Start J, 3 M, 8
Exercise 12C
S, 1
P, 6 1 a
K, 5 C, 20
Q, 7 A, 15 B, 8 E, 30
N, 1 Finish Start
D, 35 Finish
R, 5 T, 9
b 73 minutes
b c i
2 11
L, 4 Activity Duration EST LFT LST Float
I, 2 14 15
O, 6 20 21 A 15 0 15 0 0
Start J, 3 M, 8
0 0 B 8 15 23 15 0
6 6 S, 1
K, 5 P, 6 C 20 23 43 23 0
N, 1 Q, 7 D 35 23 73 38 15
Finish
22 22
5 5 T, 9 E 30 43 73 43 0
R, 5
13 13
ii Cleaning the interior
c 22 weeks iii A – B – C – E
d K–N–Q–T d 38 minutes
2 a
D, 1 E, 7 G, 1

A, 5 Dummy, 0
F, 1
Dummy, 0
B, 3 H, 1
C, 2
b 15 days

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Answers
c i Chapter 12 review
Activity Duration EST LFT LST Float
Multiple-choice questions
A 5 0 5 0 0 1 B 2 E 3 D 4 E 5 E
B 3 0 12 10 10 6 D 7 C 8 B 9 A 10 E

C 2 3 14 12 9
Short-answer questions
D 1 5 6 5 0
1 a C b F and G c 2

12C → 12 review
E 7 6 13 6 0 2 a
A, 5 G, 4
F 1 13 14 13 0 Start E, 2 F, 5
Finish
G 1 13 14 13 0 B, 6
C, 3 D, 8
H 1 14 15 14 0

ii A – D – E – F – H and A – D – E – G – H b 20 weeks
d This would delay the project by 2 days. 3 a 30 days b 13 days c 1 day
3 a d B–C–E–G–J–K
E, 10 4 a
G, 4 Activity Immediate
B, 8
A, 5 D, 15 predecessors
H, 1 I, 3 A –
C, 3 F, 6
B –
b 32 weeks
c i C –
Activity Duration EST LFT LST Float D A
A 5 0 5 0 0 E C
B 8 5 13 5 0 F B, E
C 3 5 22 19 14 G B, E
D 15 13 28 13 0 H B, E
E 10 13 25 15 2 I G
F 6 8 28 22 14 J D, F
G 4 23 29 25 2 K D, F
H 1 28 29 28 0 L J
I 3 29 32 29 0 M H, K

ii A – B – D – H – I N I
d i The project would be completed in a b 26 hours
minimum of 30 weeks. c B–F–J–L
ii Nothing. This activity has a float of 14
and so it could be extended in duration
Extended-response questions
by 14 weeks.
iii The project would be completed in a 1 a 5 hours
minimum of 37 weeks. b 24 hours
c 7 hours

General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
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12 review → 13A Topic 1

2 a
Start G, 6 J, 4
Finish

H, 7
A, 10 I, 5
B, 5 D, 5

F, 6
C, 3 E, 4

b 31 days b J, 2
c
C, 12
Activity Duration EST LFT LST Float X, 1
D, 4 L, 3
10 0 10 0 0 H, 3
Answers

A A, 3 E, 2
F, 1 K, 3 M, 3 Finish
B 5 0 7 2 2 Start
B, 2 G, 3 I, 3
C 3 5 10 7 2
D 5 10 15 10 0
E 4 10 16 12 2 c i 16 hours
ii Critical path is the sequence of activities
F 6 14 22 16 2 that cannot be delayed without delaying
G 6 15 27 21 6 the entire project.
d i 6 hours
H 7 15 22 15 0 ii A − C − J − L
I 5 22 27 22 0 iii 8 hours
4 a B–E–H–J b 2 hours
J 4 27 31 27 0 c 6 hours d 14 hours
d If an activity is on the critical path, it 5 a A, B, C
is an activity that cannot be delayed or b LST for B is 1, EST for E is 10, LST for I
extended in duration without affecting the is 18
overall minimum completion time of the c i A−D−F−I−J
project. ii 27 months
e The activities that have float equal to zero. d i B − C − D − F − I − J and
f A–D–H–I–J A−D−F−I−J
g Nothing. C has a float time of 2, which ii 24 months
means it can be delayed by up to 2 days
without affecting the overall completion
time of the project.
Chapter 13
3 a I mmediate predecessor of E is A. EST for l 13A Topic 1 Loans, investments
is 8. EST for M is 13. and annuities
Multiple-choice questions
1 E 2 E 3 D 4 E 5 C
6 A 7 E 8 A 9 B 10 C
11 B 12 D 13 D 14 A 15 C

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Answers
Short-answer questions Complex unfamiliar questions
Simple familiar questions 7 $121 649.93
A1 = $10 064.00; A2 = $10 128.41;
1 a  8 a 
Loan 2. Amanda will pay less interest in
A3 = $10 193.23 total with this loan.
b 8 b No. Even with payments of $1900, Loan 2
2 a A0 = 14 500, An+1 = 1.004 × An still results in less interest overall.
b $14 674.70 c $15 957.95
3 a 0.85% 13B Topic 2 Graphs and networks

13A Topic 1 → 13B Topic 2

b A0 = 4500, An+1 = 1.0085 × An
c $4981.08 Multiple-choice questions
4 a $28 047.29 b $3047.29 1 E 2 B 3 B 4 B 5 E
5 $12 500.00 6 B 7 C 8 B 9 B 10 A
6 a $3000 b $150
c 12.48% d $2282.56 Short-answer questions
7 a 0.59% Simple familiar questions
b A0 = 50 000, An+1 = 1.0059 × An − 500
c $48 751.71 d 10 1 a 3 b E c 2
8 a $9643.96 b $343.96 d A, C, D e B − C, F − D
9 a $3889.03 b $139.03 2 a R b Q
10 $32 000 c   P  Q R    S
P 0 0

[ ]
11 a 3.72% b $244 843.13 c $3843.13 1 0
Q 1 0 0 1
12 a A0 = 145 000, An+1 = 1.0034 × An − 2500
R 0 0 0 1
b $134 896.53 c $2396.53
S 1 0 1 0
13 $34 598.05
14 a $602 b 6.86% 3 a None
b 2
Extended-response questions c
A E
Complex familiar questions
1 a Bank A, it has the highest effective rate of
interest
b Multiple answers possible.
Total amount withdrawn from Bank A is D
$40 264.69 B
Total amount withdrawn from Bank B is
$40 126.15
2 a i A0 = 5000, An+1 = 1.0095 × An C
ii An = 5000 × (1.0095) n
4 a 8 b 5
b $5399
c 5 d 5+5−8=2
3 a $1257.62
5 a 20 km b 13 km
b $84 322.76
c $2045.92
4 a i $1314.08 Extended-response questions
ii $1.62 Complex familiar questions
iii This is the amount that has been over- 1 a 
It is drawn so that no edges cross over each
paid. The bank must refund this. other.
b 176 b v = 7, f = 6, e = 11, 7 + 6 − 11 = 2
5 a $485 000 b $100 496.83 c 72
6 a 24 b $221 020.56
c 9 d $16 584.36

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13B Topic 2 → 13C Topic 3

c i C 13C Topic 3 Networks and decision

ii (open) trail mathematics
d i C−B−D−E−F−G−C
ii Hamiltonian cycle Multiple-choice questions
2 a 7 km b 3 km c B and D 1 C 2 E 3 E 4 D 5 C
d i D 6 C 7 D 8 C 9 D 10 E
6
A 6
F Short-answer questions
7
5
Simple familiar questions
5
C 1 A − B or C − B or A − C
6 2 a 7
9
4
B 2
7
E
3 4
ii   A  B  C  D E  F
A 0 1 0 1 0 0

[ ]
B 1 0 1 0 1 0 5
Answers

3
C 0 1 0 1 1 1
D 1 0 1 0 0 1
E 0 1 1 0 0 1 b 24
F 0 0 1 1 1 0 3 a 1
b Sharon
c Leah – Brazil, Sharon – Portugal, Kris –
Complex unfamiliar questions
Tibet, Sue – Zimbabwe, Kathy – Fiji
3 a 
Multiple answers are possible. One is 4 a Ahmet
A−B−D−E−C−A b Ahmet – Canapes, Beryl – Starter, Cynthia –
b BC, DE, CE Desert, Dario – Main
c B − C − E − D − E − C − A − B − D. c i 10 h
Must start and end at odd-degree vertex. ii 4 h
d 9:54 a.m. 5 a i 22
4 a 11 km ii 11
b There are exactly two odd-degree vertices in b
the network. 2
3 4
c Checkpoint V. 9
3 5
d Checkpoint U. If they do, they will have to sink
travel one of the roads to Bevin a second source 3
6 3 4
time.
e Bevin − T − U − V − Carter or 8 2
Bevin − T − U − Carter
5
f 21 km
g 6 a 9 b 3 c F and G
P 7 a
S W
3 D, 2
Amity 2 1 B, 2
Bevin 2 A, 3 G, 2
T Carter
2 Start Finish
5
4 3 3
V C, 5 E, 3 F, 6
5 R
Q U
b 19 hours
8 a 17 b 7 c 1
d A−C−G−J−L

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Answers
9 a 3 a A − Z, B − W, C − X, D − Y, or A − Z,
Activity Immediate
B − X, C − W, D − Y
predecessors
b $130
A − 4 a 11 megalitres per day
b 33 megalitres
B A
5 a 
The dummy shows that activity I has
C − ­immediate predecessor E.
b
D −

13C Topic 3  

Activity Duration EST LFT LST Float
E C
(days)
F B, E
A 6 0 7 1 1
G C
B 5 0 5 0 0
H D
C 2 5 7 5 0
I G, H
D 4 5 13 9 4
J F, I
E 4 7 11 7 0
b 24 days F 6 7 16 10 3
c C−E−F−J
G 4 11 15 11 0
Extended-response questions H 3 9 16 13 4
Complex familiar questions
I 2 13 18 16 3
1 a 112 km
J 3 15 18 15 0
b i minimum spanning tree
ii M K 12 18 30 18 0
38
L 31
c B−C−E−G−J−K
35 S N d The critical path contains all of the activities
that cannot be delayed or extended without
24
R affecting the overall completion time of the
project.
47 O
63
P Complex unfamiliar questions
55
Q 6 sink 1 = 8, sink 2 = 18
iii 293 km 8
2 a 13 6
Tyson Flakey source 1 4 sink 1
15 12 2
7 9
14 3
Emma Cherry Chomp source 2 14
sink 2
8 6
18
Gregory Honey Crunch
7 700 kilolitres per minute for each outlet.
8 a 15 hours
Rose Snacker b B−C−F−I
c A is not on the critical path. It already has
b Tyson slack time and reducing it further has no
c Tyson – Snacker, Emma – Flakey, Gregory – effect.
Cherry Chomp, Rose – Honey Crunch d $200

General Mathematics Units 3 & 4 ISBN 978-1-108-46154-2 © Peter Jones et al. 2019 Cambridge University Press
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