ou will pay into a pension fund until you are aged 65. You are expected to live until your 80th birthday. You are currently 21 years of age. Pension fund contributions are made bi-weekly (use n=2/52) beginning in 2 weeks time. If you are promised an interest rate of 7% compounded monthly, what should be the size of your contribution if you plan to have $1 million at age 65?

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.