Problem
You applied for a job with a local bank. As part of its evaluation process, you are asked to take a written test. Show your workings in formulas and round your final answers to 2 decimal places with the units of either "tiny_mce_markerquot;, "%" or "years old" for the following questions:
• CC Corporation invested $250,000 at 6 percent interest, compounded quarterly for 5 years. How much "interest on interest" did the company earn over this period of time?
• Determine the interest rate (APR) that would cause $400 to grow to $664.68 in five years with monthly compounding.
• Jason and Simon are twins. Today is their 33rd birthday. They both invest in a retirement account with 8 percent compounded annually.
Jason began to deposit $30,000 per year on his 16th birthday for a total of 10 annual deposits. Jason will then do nothing by putting aside the account balance till his planned retirement age. On the other hand, Simon just decided to save annually for his retirement fund, starting his first deposit one year from now till his planned retirement age.
o Calculate Jason's current retirement account balance
o At the time when Simon places his 15th annual deposit, how old will Simon be?
o If Simon plans to accumulate $5 million on his 65th birthday (i.e. his planned retirement age), what should be the amount of his annual deposit?
• Anson invests $1,000 at the beginning of each month (the first payment is made today) for the next 4 years in an account that pays 6% annual interest, compounded monthly. Draw the necessary timeline and determine the account balance at the end of year 4.