Over the past several years, Mr L has been able to save regularly. As a result, today he has $14,188 savings. He wants to establish her retirement fund in 5 years and feels he will need $50,000 to do so.

a. If he can earn 12% p.a. on his money, how much will his $14,188 savings be worth in 5 years? Will Mr L have $50,000 he needs? If not, how much more money will he need?

b. Given your answer to (a), how much will Mr L have to save each year over the next 5 years to accumulate the additional money, assuming he can earn interest rate at 12% p.a.?

c. If Mr L can afford to save only $2,000 a year, given your answer to (b), will he have $50,000 he needs to establish his retirement fund in 5 years? What expected return Mr L should seek to grow his savings of $14,188 to $50,000 in 5 years? If he invests in an investment with 12% return per annum, how long should Mr L plan ahead for his savings to achieve his retirement fund?

d. As a portfolio manager, what possible advice you could suggest Mr L to consider to achieve his goal in terms of the time value of money factors/considerations.