Question 13

An insurance agent is selling you an immediate-retirement annuity package, which for a single premium amount paid today will provide you with R18 000 at the end of each year for the next 20 years. You currently earn 10% on low-risk investments comparable to the retirement annuity. Calculate the most you would pay today.

1. R2 675.59

2. R121 095.00

3. R153 244.15

4. R396 000.00

Question 14

Loan easy Ltd lends you R50 000 today with terms and conditions to pay off the loan in forty-eight monthly instalments of R800 each. Calculate the effective annual interest rate the Loan easy Ltd is charging you?

1. 1.03%

2. 8.25%

3. 9.00%

4. 12.36%