Question
In a normal year an investment banker pays voluntary contributions of 500 into their pension on a weekly basis. Due to COVID-19, over the past
In a normal year an investment banker pays voluntary contributions of £500 into their pension on a weekly basis. Due to COVID-19, over the past year the investment banker has had to reduce their voluntary contributions into their pension. At the beginning of the past year, for the first 20 weeks, the investment banker paid £300 of voluntary contributions into their pension on a weekly basis. Then, for the following 20 weeks the investment banker paid £150 of voluntary contributions into their pension on a weekly basis. Unfortunately, ongoing financial difficulties due to COVID-19 meant for the final 12 weeks of the year, up to today, the investment banker did not pay any voluntary contributions into their pension.
Assume that the voluntary contributions are paid at the end of each week and the appropriate discount rate for a week is 0.1 %.
What is the change in the value today of the voluntary contributions paid over the past year in comparison with a normal year?
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Step: 1
To calculate the change in the value today of the voluntary contributions paid over the past year in comparison with a normal year we need to calculate the present value of the actual contributions an...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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