Cain and Kim live in an upscale neighbourhood in Klein Windhoek, Namibia. Cain is a partner in the family owned automotive painting business. Kim stays home taking care of their daughter, West, who is five years old. After visiting their financial planner, the couple became concerned that they were spending too Page 6 of 7 much and not saving enoughfundsaside for Wests future education. The family earns NS90 000peryear, but with the rising costs of education, they are getting concerned. Cain is an alumnusof the International University of Management, a private university in the country. Kim graduated from the University of Namibia (UNAM). The couple have planned to send West to one ofthese universities. The tuition fees and text book expenses at UNAMis estimated at exactly NS7 000 per year while |UMstuition fees and text books cost approximately N$15 000 per year. When Westturns 18, the couple wishes to send her to one of these two exceptional universities. They have a slight preference for IUM. The problem, however, is that with the rate at which tuition fees is increasing, the couple is not sure they can save enough money. They have decided they do not want to borrow money to pay for Wests education. Assume thetuition at both universities will increase at an annual rate of 2% from the time Weststarts college. Living expenses are currently estimated at NS$5 000 per year at both universities. This expense is expected to grow at only 2% per year. Further assume that the couple can deposit their moneyinto a growth oriented mutual fund at Old Mutual Namibia which has historically earned 10% per annum. The couple wishes to save by having a pre-determined amount automatically withdrawn from their bank account at the end of each month. Theyplan to contribute from now until West starts college. When Weststarts college, at the beginning of her first year, they will stop making contributions. The duration of Wests college education is expected to be four years. Required: a) What lumpsum amount should the couple deposit today for Wests university education should they decide that they want her to go to IUM? (10) Assuming West has now turned 18 and instead of taking up university studies, she has been convinced by her friends to get married. The family have therefore decided to give their daughter all that they have accumulated and saved up for her university education. Cain, who is now 35 yearsold plans to retire at the age of 65. He plans to save NS1 000 per year for the next 20 years to have a retirement income of NS5O 000 per year for 15 years after retirement. b) Determine whether Cain will achieve his retirement plans and if not, how much more should he save per year to achieve his goal. The savings will earn 7% per annum. (10)