Question 3 Time value of money

Mr. Hengari is a young financial director of a listed company. Although he enjoys his work, he would like to retire at the age of 45 (in 10 years time) and go enjoy sailing in the Indian Ocean, visiting the nearby Islands. He estimates that he will require an amount of N$2 400 000 to buy himself a yacht and an additional N$400 000 to buy supplies and other necessities. Mr Hengari intends to make equal annual payments into a bank account on which he can earn 6% interest compounded annually.

Required: a) What amount should Mr. Hengari pay annually to achieve his objectives in 10 years time?

b) Instead of making equal annual payments, Mr. Hengari wants to make one single sum payment today, investing it at 6% interest compounded annually. What would this single sum be?