Exam Style Question on Finance
A mathematics exam-style question with a worked solution that can be revealed gradually
Question id: 379. This question is similar to one that appeared in an IB AA Standard paper (specimen) for 2021. The use of a calculator is allowed.
Ruby invests a certain amount of money in a bank account that pays a nominal annual interest rate of 6.7%, compounded quarterly.
The amount of money in Ruby’s account at the end of each year forms a geometric sequence with common ratio, r.
(a) Find the value of the Annual Equivalent Rate (AER) represented by r.
(b) If Ruby invested her money on the 1st January 2022, find the year in which the amount of money in Ruby's account will become three times the amount she invested.
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