In: Finance
William 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 $2 000 000 in savings.
a) How much will William 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.?
Show formula, variables, calculation and a concluding statement in your response.
b) How much will William 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.?
Show formula, variables, calculation and a concluding statement in your response.
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 William and explain what this number means.
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JUST WRITTEN IN EXCEL, NO EXCEL FUNCTION IS USED