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Mrs Okoth invests a sum of money for her retirement which is expected to be in 20 years time. The money is invested in a
Mrs Okoth invests a sum of money for her retirement which is expected to be in 20 years time. The money is invested in a zero coupon bond which provides a return of 8% per annum effective. At retirement, she requires sufficient money to purchase an annuity certain of KES 1,200,000 per annum for 25 years. The annuity will be paid monthly in arrear and the purchase price will be calculated at a rate of interest of 6% per annum convertible half-yearly.
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