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Mathematics-Online problems:

Interactive Problem 160: Calculation of Annuities

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Felix Sparmann has graduated from university with a very good master's degree. Thanks to his excellent grades he starts working for Raffzahn Ltd. receiving an initial salary of 4,000 EUR. However, he has been told that the yearly increases in his salary would not exceed 3 percent. Sparmann trusts these prospects, since Raffzahn Ltd makes a sound impression on him caused in particular by the internal pension fund ``RaffRent'' (5 % effective annual rate of interest, refund of the deposits guaranteed). He decides to deposit 20 % of his steadily rising salary into the fund at the first day of each month over a period of 40 years (=65-25).

Determine the monthly annuity Felix Sparmann can expect from the accumulated amount over a period of 20 years (=85-65) (payment starting immediately at the end of the accumulation period, disbursement at the first day of each month). Decide, whether Sparmann's dream of spending his retirement in Monte Carlo is realistic.

Hint: Your mathematical calculation should not consider the effects that arise from rounding the amounts of annuities and interest to whole cents.

Answer:

Monthly annuity rounded to whole cents:   EUR


   

(Authors: Höllig/Walter)
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  automatically generated: 2/ 6/2018