QUESTION ONE Jay has just graduated from Mulungushi University. He plans to work for five years and then leave for South Africa to pursue his post graduate studies. . He figures that he can save K35, 000 a year for the first three years and K50, 000 a year for the next two years. These savings will start one year from now. In addition, his family gave him a K25, 000 graduation gift. He puts the gift, and the future savings when they start, into an account that pays 10% compounded annually. Required a) Briefly explain the time value of money concept b) What type of time value money applies to Jay’s case c) What will his financial "stake" be when he leaves for Australia South Africa five years from now? Round off to the nearest value. Show your workings
QUESTION ONE
Jay has just graduated from Mulungushi University. He plans to work for five years and then leave for South Africa to pursue his post graduate studies. . He figures that he can save K35, 000 a year for the first three years and K50, 000 a year for the next two years. These savings will start one year from now. In addition, his family gave him a K25, 000 graduation gift. He puts the gift, and the future savings when they start, into an account that pays 10% compounded annually.
Required
a) Briefly explain the time value of money concept
b) What type of time value money applies to Jay’s case
c) What will his financial "stake" be when he leaves for Australia South Africa five years from now? Round off to the nearest value. Show your workings
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