Question 22

Jones received a bonus of R150 000 today from his employer. He deposits it into a savings account that earns 10% interest per annum, compounded annually. He plans to buy a land plot in four years. The land plot he wants to buy currently costs R500 000 and this price is forecast to grow by 7% per annum. Jones plans to use his savings to partially finance his land plot; however, he wants to finance the balance using a bond that will cost 9% interest per annum, compounded annually, over a period of ten years. Calculate the annual payment Jones will have to make on his bond when he buys the land plot.

1. R67 903.75

2. R219 615.00

3. R435 783.01

4. R655 398.01