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Financial Assignment involving annuities

  1. Feb 7, 2012 #1
    The Question is as follows;

    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?
  2. jcsd
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