Anne has a new job and her employer will pay her $200 a month for superannuation plan.
Question:
Anne has a new job and her employer will pay her $200 a month for superannuation plan. Now Anne is 25 years old and she plans to retire when she is 65 years old. The superannuation plan earns an average of 9% monthly compounding.
Required:
a. How much will Anne have in her superannuation account when she retires?
b. If Anne voluntarily puts $15 000 in her superannuation when she is 50 years old, how much will she have in that account when she retires?
c. Anne has a second investment and it will start to pay her $ 12,000 every year forever. How much is the present value of this second investment cash flow if the rate of return is 7%?
d. If the payment from Anne’s second investment will start at $12,000 then grow at 5% each year forever, how much is the present value of the investment payments, assuming the same rate of return 7% applies?