Question

Q2

You have recently been recruited by KPMG, one of the top four global firms, dealing with providing advice to high net worth clients. The Chief Financial Officer, Mr. Smith, has assigned your first task, which involves analysing the three scenarios below:

(a) Mary wants to have $500,000 to use for retirement in 4 years. If she can earn 2% per month, how much does she need to deposit on a monthly basis if the first payment is made in one month? [10 marks]

(b) Professor Sherry wants to have $300,000 to use for retirement in 20 years. If he can earn 1.5% per month, how much does he need to deposit on a monthly basis if the first payment is made today? [10 marks]

(c) Mrs. Betty wants to receive $ 5,000 per month in retirement. If she can earn 7% per annum and she expects to need the income for 12 years, how much does she need to have in her account at retirement, assuming she would retire in 5 years from now? [10 marks]

Answer 1