You have inherited $50,000 and want to invest for retirement.
You have inherited $50,000 and want to invest for retirement. Alice, your close friend working at a local
investment bank shared with you two products available for investment.
The first, Forever Axia Fund, will pay its investors 3% per year for the first 5 years and 7% per year thereafter. The second, Rocket High Dividend Fund, pays its investors 6% per year forever.
(a) Calculate how much you will have in each fund in 12 years’ time.
(b) Analyse which investment product you will choose if you wanted to retire in 30 years’ time.
(c) Calculate the year in which both funds will have equal value.