uestion 3 15 marks 27 minutes A retirement plan guarantees to pay you or your es
ID: 2619996 • Letter: U
Question
uestion 3 15 marks 27 minutes A retirement plan guarantees to pay you or your estate a fixed annual amount for 20 years. At the time of retirement you will have N$ 313 600 to your credit in the plan. The plan anticipates earning 10% annually over the period you receive benefits. How much will your annual benefits be assuming the first payment occurs 1 year from your retirement date? (5 marks) a) b) A student managed to acquire an interest free-loan of NS 80 000. After completing her dies and beginning to work, she saves NS 15 000 every year and invests the amount at 12.5% per annum compound interest. What additional amount is required to fully repay the loan after four years of saving? (10 marks)Explanation / Answer
a) FV = 0, PV = 313,600, rate = 10%, N = 20
use PMT function in Excel
annual payments = 36,835.34
b) PMT = 15,000, PV = 0, rate = 12.5%, N = 4
use FV function in Excel
amount saved after 4 years = 72,216.80
additional amount = 80,000 - 72,216.80 = 7,783.20
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