You decide to start saving regularly after you complete your study programme in order to provide for expected and unexpected contingencies. Starting one year from now, you deposit 5,000 from your salary every year for ten years into an investment account that pays 10% interest per year. Your partner starts saving the same amount of 5000 per annum only ten years later, but continues to save the sum regularly for forty years thereafter.

Required:

(i) How much money would you have accumulated in your account 10 years after you started saving? Undertake this calculation using the relevant formula, and also using FVAF tables.

(ii) Assume that you leave your job after 10 years in order to raise a family. You do not save any more money, but the amount you have saved over 10 years remains in the account, where it continues earning interest at 10% per year. How much will the money accumulate to in another 40 years?

(iii) In 10 years' time, your partner starts saving 5000 a year for the next 40 years. How much wealth would your partner, who started saving just 10 years later and saved four times the amount, have accumulated after 40 years? What accounts for the difference between your savings and your partner's? Discuss the message derived from the above calculations.