No tables, only formulas, please Someone deposits £10,500 each year into a tax-free savings plan over a 20-year period. The payments are made monthly in arrears during the first 5 years and thereafter quarterly in arrears for the remaining 15 years. The savings plan pays compound interest at the rates of: 6% p.a. nominal convertible monthly for the first 10 years, and 7.5% p.a. nominal convertible quarterly for the remaining 10 years. (i) Calculate the total amount of fund accumulated in the savings plan at the end of the 20- year period. (ii) At the end of the 20-year period, the individual intends to invest the total savings into a level fixed term annuity product that provides a future retirement income. Calculate the monthly income that the individual can obtain by investing the sum calculated in part (i) into a 25-year term annuity payable monthly in arrears at an effective interest rate of 4.5% p.a.
correct answers are i) 455,154.48 and ii) 2,506.64
No tables, only formulas, please
Someone deposits £10,500 each year into a tax-free savings plan over a 20-year period. The payments are made monthly in arrears during the first 5 years and thereafter quarterly in arrears for the remaining 15 years.
The savings plan pays
-
6% p.a. nominal convertible monthly for the first 10 years, and
-
7.5% p.a. nominal convertible quarterly for the remaining 10 years.
(i) Calculate the total amount of fund accumulated in the savings plan at the end of the 20-
year period.
(ii) At the end of the 20-year period, the individual intends to invest the total savings into a level fixed term
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