Peter intends to retire in 25 years time. he decides to save 500 at the start of each month until he retires. The pension fund is offering him a rate of 5.2% AER.
(A) (i) Find the rate of interest compounded monthly that would be equivalent to an AER of 5.2%, correct to 6 significant figures.
(ii) What lump sum will peter receive on his retirement?
(B) Peter uses his retirement fund to purchase an annuity at 4.2% AER. This will give him a repayment at the start of each month for the next 25 years. What will his monthly payment be?