Reference no: EM132817454

Question - Rocky Rockett expects to retire in 40 years time and has decided to start investing for his retirement. He is looking at two possible retirement funds, both of which mature in 40 years time and which offer a return of 11% per annum, compounded annually. Retirement Fund A requires annual instalments of R2 500 at the beginning of each year commencing immediately. These instalments will continue for 25 years. Thereafter the investment will continue to earn the quoted return until the policy matures. Retirement Fund B requires annual instalments of R2 200 at the end of each year with the first instalment being made in one year's time. These instalments will continue each year up until the policy's maturity date. Calculate which retirement policy will have the greatest maturity value.