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An individual age 30 is planning to start investing in a personal pension. Her

aim is to have sufficient funds to provide a monthly pension of £1000 when

she retires at the age of 65, payable for 30 years. She is able to make bi-annual

contributions to the fund from her salary bonus. In order to facilitate planning,

she has found that current pension annuity interest rates are r12 = r % and

current savings rates are r4 = r %.

a) How much does she need to have in her pension pot in order to purchase

this annuity to provide her pension at 65?

b) How much will she have to set aside every six months in order to save

this amount?

r is given to be 5.71%

I'm struggling for ideas and dont know where to start

Anybody have any ideas?

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# Homework Help: Financial Assignment involving annuities

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