Stanford would like to retire in years. He recently started a new and exciting job as a

marketing specialist at an international company based in Cape Town and would like to

start a retirement fund. He has already saved up R Stanford predicts that he will

need R each year after retirement in order to live comfortably. He expects to

live years after his retirement and would also like to leave a R million inheritance for

his family trust ie at the end of the years Stanford currently earns an effective

interest rate of per annum, which is not expected to change until he retires.

Thereafter, in retirement, he will earn an interest rate of per annum,

compounded annually.

Required:

Calculate how much money Stanford would require at his retirement date.

Calculate the monthly payments that Stanford would need to invest in order to reach

the required capital calculated in Question

B You plan to buy a German sedan at a cost of R You will pay a initial deposit

immediately in cash. The remainder of the cars cost will be financed by the bank over a

period of five years. You will repay the loan by making monthly payments at a quoted annual

interest rate of compounded monthly. The first payment will be due one month from

now.

Calculate the monthly payments you will need to make on the loan.

How much interest will the bank receive by the end of the loan term?

How can you reduce the total interest calculated in that you pay to the bank?