Question 2 Herman has opened a retirement fund account which pays 7 percent interest and requires RM5,000 annual deposits. Herman will retire in 15 years and expects 10 years of retirement life. What is the maximum annual retirement benefit Herman can get during his retirement years? b. [4 marks] To expand its operation, Dynamic Tyres Ltd. has applied to the International Bank for a 3-year, RM3,500,000 loan. Prepare a loan amortisation table assuming 10 percent rate of interest [6 marks] You have just been promoted as the new assistant branch manager of a local-based international bank. The branch manager, who is an expatriate, has asked you a question on the different types of interest rate quotations. The question he asked is which rate should the bank advertise on monthly-compounded loans - the nominal annual percentage rate or the effective annual percentage rate? And which rate should the bank advertise on quarterly-compounded savings accounts? Please explain to the branch manager which quotation would attract consumers and why? [4 marks] d. Explain the differences between periodic rate, nominal rate and effective rate. [5 marks) You are considering an investment in a 40-year security. The security will pay RM25 a year at the end of each of the first three years. The security will then pay RM30 a year at the end of each of the next 20 years. The nominal interest rate is assumed to be 8 percent, and the current price (present value) of the security is RM360.39. Given this information, what is the equal annual payment to be received from Year 24 through Year 40 (i.e., for 17 years)? [6 marks) [TOTAL: 25 MARKS]