Your friend, Sandile Mohapi, has recently been promoted to senior engineering manager at one of the biggest IT companies based in Rustenburg, North West. Sandile has always been interested in investing in property but has never taken any action due to financial constraints. As a result of his new increased salary he now plans to make his first investment in property in six years' time from today. He will start his property investment journey by building a two-bedroom apartment in Johannesburg, Gauteng. He will use the apartment to earn rental income. It is estimated that he will need a total amount of R1 052 000 in six years' time to be able to build the apartment. He would like to use his own money to start his investment as opposed to obtaining external financing. His bank, LenderBank Limited, has a 6-year savings scheme that provides a return of 9.5% per annum compounded monthly, if monthly contributions of R11 000 are made at the beginning of each month. Sandile also enquired with another financial institution, Duto Financial Services Limited, regarding the savings plan they offer. This savings plan will require Sandile to deposit an initial lump sum amount of R30 000 immediately. In addition to the lump sum amount Sandile will have to make subsequent quarterly payments of R18 500 at the end of each quarter. Duto Financial Services Limited will provide a return of 11.3% per annum compounded quarterly on the savings plan for the next six years. Sandile is unsure whether either of the two saving options will allow him to reach his property goal. He has requested your assistance given your financial management expertise. Marks QUESTION 2: Subtotal Total 8 (a) Calculate and advise Sandile on whether either of the saving options offered by LenderBank and Duto Financial services will allow him to achieve his property investment goal. (b) Explain to Sandile the difference between a nominal and effective interest rate. 2 TOTAL MARKS FOR QUESTION 2 10