Calculate the future value of the total pension FRQWULEXWLRQVRQ-RKQQ\¶VUHWLUHPHQWdate assuming he makes his first contribution one year from now.

Answer 3 questions only from the 6 available.
Question 1
Part a)
Johnny England is considering when he should join his FRPSDQ\¶VHPSOR\HHSHQVLRQVFKHPH
Under the terms of the scheme, his employer will match -RKQQ\¶V contributions i.e. for every £1 that Johnny England pays into his pension, his employer will also contribute £1.
When he joins the scheme, Johnny will make a single annual payment of 5 per cent of his annual salary into the pension scheme. He will continue to do so every year until the day he retires. Johnny plans to retire in 30 years from today.
In making any calculations, assume that the pension has a guaranteed return of 6 per cent per year and that Johnny¶VDQQXDOVDODU\in one \HDUV¶WLPH will be £30,000 and will increase at 5 per cent per year thereafter.
Required:
i. Calculate the present value of the total pension contributions RQ-RKQQ\¶VUHWLUHPHQW date assuming he makes his first contribution one year from now. Explain your workings and any assumptions made.
ii. Calculate the future value of the total pension FRQWULEXWLRQVRQ-RKQQ\¶VUHWLUHPHQWdate assuming he makes his first contribution one year from now. Explain your workings and any assumptions made.
iii. Calculate the future value of the total pension FRQWULEXWLRQVRQ-RKQQ\¶VUHWLUHPHQW assuming he makes his first contribution five years from now. Explain your workings and any assumptions made.

iv. With reference to your answers above, outline the reasons why it is important for
Johnny to begin contributing to his pension plan as soon as he can.