Hi I Need Assistance With The Workings Below Part B A Recent Article In The News

Hi I need assistance with the workings below


A recent article in the news indicates that you will need 75% of your current monthly salary grown by inflation upon retirement. You currently earn R20 000 per month. The South African inflation rate is 6%. You complete the inflation adjusted calculation and you find that you will require R154 285.76 per month for 20 years when you retire (based on mortality rates). Assume you are 25 years of age and will retire at 65.


2.2 Calculate the lump sum amount you require at the date of your retirement if you are able to get an interest rate of 8% compounded annually. (6)

2.3 Ignoring your answer in question 2.2, if you require R18 000 000 at retirement, and are able to invest R3 000 per month for 40 years what nominal interest rate will you require to reach your goal? (5)

2.4 What is the effective rate of your answer calculated in 2.3? (2)

2.5 Briefly explain why an effective rate is higher than or equal to a nominal rate.(2)

Prof. Angela


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