Question
12.Jack earns an annual salary of $86 400, which is paid monthly. He joined the superannuation fund on his 30th birthday and he now pays
12.Jack earns an annual salary of $86 400, which is paid monthly. He joined the superannuation fund on his 30th birthday and he now pays 8% of his gross salary to the superannuation fund. His employer contributes a further 17%.
a) What amount of money is placed each month into his superannuation fund?
b) The superannuation fund pays 6% per annum compound interest, compounded monthly. Assume that Jacks annual salary remains constant, what is the amount of superannuation he will have available at his 60th birthday? Give your answer correct to the nearest dollar.
c) If Jack retires at the age of 60 and there is an average of 2.5% inflation over the period of time that Jack is working, what is the purchasing power of the amount of superannuation determined in part b? Give your answer correct to the nearest dollar.
d) Suppose that when Jack retires he places his superannuation in a perpetuity which will provide a monthly income without using any of the principal. If the perpetuity pays 5% per annum compounding monthly, what monthly payment will Jack receive? Give your answer correct to the nearest dollar.
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