Tilak is keen to apply his finance knowledge to his real-life saving goals. He is currently 21 years of age and wishes to retire from full-time work at the age of 50 with $3,000,000 in savings.

a) How much will Tilak need to contribute at the end of each month in order to receive $2 000 000 at the age of 50 at a compound interest rate of 6.10% p.a.? 

b) How much will Tilak need to contribute at the start of each month in order to receive $2 000 000 at the age of 50 at a compound interest rate of 6.10% p.a.?

c) Explain why there is a difference between the two amounts determined in parts a) and b) above?

d) Calculate the effective interest rate for Tilak and explain what this number means.

Answer rating: 100% (QA)

a Tilak will need to contribute 233137 at the end of each month in order to receive 2000000 at the age of 50 b Tilak will need to contribute 229472 at ... View the full answer