Cameron Williams, 25, is a very organized person. He has re- cently joined his first full-time job, which pays him 35,000 per annum, and now wants to ensure that he saves for all his future life goals. His employer participates in a workplace pen- sion scheme and matches up to 4 percent of salary contribution toward the pension. Cameron also wants to buy a house as soon as possible and feels that he will need 20,000 as a down pay- ment toward his first home. He has been working part-time from a very young age and has saved a total of 30,000, which has been invested in government bonds paying 3 percent per annum. He also wants to go on a round-the-world trip before he turns 30. He has estimated that this will cost him around 22,000. He expects to save 8,000 in the next three years and take a personal loan for the remaining amount to achieve his dream holiday plan. Questions ------------------- - 1. Explain to Cameron how much an investment of 10,000 will grow in 40 years if it earns 8 percent per annum and advise if it's beneficial for him to join his pension plan as early as possible. 2. Assuming that he can earn 6 percent on his savings, how much does Cameron need to deposit now to cover the amount of his contribution in three years' time? How much will he need if he can earn 11 percent on his savings? 3. What will be the value of his savings if he withdraws 20,000 for his house purchase when he is 30 and leaves the remaining in the same investment till he retires at the age of 65? 4. How are compounding and discounting related? 5. Suggest two ways by which Cameron can have a higher amount available to him at the time of his retirement. Cameron Williams, 25, is a very organized person. He has re- cently joined his first full-time job, which pays him 35,000 per annum, and now wants to ensure that he saves for all his future life goals. His employer participates in a workplace pen- sion scheme and matches up to 4 percent of salary contribution toward the pension. Cameron also wants to buy a house as soon as possible and feels that he will need 20,000 as a down pay- ment toward his first home. He has been working part-time from a very young age and has saved a total of 30,000, which has been invested in government bonds paying 3 percent per annum. He also wants to go on a round-the-world trip before he turns 30. He has estimated that this will cost him around 22,000. He expects to save 8,000 in the next three years and take a personal loan for the remaining amount to achieve his dream holiday plan. Questions ------------------- - 1. Explain to Cameron how much an investment of 10,000 will grow in 40 years if it earns 8 percent per annum and advise if it's beneficial for him to join his pension plan as early as possible. 2. Assuming that he can earn 6 percent on his savings, how much does Cameron need to deposit now to cover the amount of his contribution in three years' time? How much will he need if he can earn 11 percent on his savings? 3. What will be the value of his savings if he withdraws 20,000 for his house purchase when he is 30 and leaves the remaining in the same investment till he retires at the age of 65? 4. How are compounding and discounting related? 5. Suggest two ways by which Cameron can have a higher amount available to him at the time of his retirement