Monica is the recipient of a trust fund that she will receive over a period of 12 years. Under the terms of the trust, she is to receive Sh.15,000 the first year and each succeeding annual payment is to be increased by 8%.

How much will she receive during the eighth year? [2 marks]

What is the total amount of the twelve payments she will receive? [2 marks]

A Kenya top basketballer is negotiating a contract with Lions Basketball Club. His opportunity cost is 9%. He has been offered two possible 4-year contracts. Payments are guaranteed, and they would be made at the start of each year. Terms of each contract are as follows:

X yr 1 Sh.450,000 yr 2 Sh.650,000 yr 3 Sh.650,000 yr 4 Sh.650,000 Y yr 1 Sh.550,000 yr 2 Sh.650,000 yr 3 Sh.700,000 yr 4 Sh.750,000

As his manager, which contract would you recommend that he accept and why? [4 marks]

After making a down payment of Sh.60,000 for an automobile, Joshua paid Sh.6,000 per month for 36 months with interest charged at 6% per year compounded monthly on the unpaid balance.

What was the original cost of the car? [3 marks]

What portion of Joshuas total car payments went toward interest charges?