Aiden is preparing to retire in 15 years' time and needs a sum of money for his
retirement. He visited 2 banks who recommended him the following
investment plans.
Bank A:
Offers a compound interest rate of 6.5% per annum for first 3 years only.
For subsequent years, the compound interest rate is 2% per annum.
Money must be deposited for a minimum of 5 years.
Bank B:
Offers a compound interest rate of 3% per annum.
Money must be deposited for a minimum of 10 years.
(a) Aiden has only $30 000 to invest now.
(i) Advise how he should deposit his money to get the best returns after 15
years.
(ii) State the maximum returns he will reap based on your recommendation.
Leave your answer to the nearest cents.
(b) State one assumption that you made in your advice to Aiden.
