Reference no: EM132639934

Faris and Faiz are twins and both turned 25 today. Their grandfather, a successful businessman began putting RM2,500 per year into a trust fund for Faris on his 20th birthday, and he just made a 6th payment into the fund. The grandfather (or his estate's trustee) will make 40 more RM2,500 payments until a 46th and final payment is made on Faris's 65th birthday.

Until now, the grandfather has been disappointed with Faiz, hence has not given him anything. However, they recently reconciled, and the grandfather decided to make an equivalent provision for Faiz. He will make the first payment to a trust for Faiz today, and he has instructed his trustee to make 40 additional equal annual payments until Faiz turns 65, when the 41st and final payment will be made.

Problem 1: If both trusts earn an annual return of 8%, how much must the grandfather put into Faiz's trust today and each subsequent year to enable him to have the same retirement nest egg as Faris after the last payment is made on their 65th birthday?