Annual premiums for property insurance

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Reference no: EM131071186

An insurance company charges the following annual premiums for property insurance:

Buildings Contents

£2.75 per £1,000 insured £4.20 per £1,000 insured.

A property owner wishes to insure a building valued at £142,000 and contents valued at £31,750.

(a) Calculate the total annual cost to the owner of insuring the buildings and contents.

A service fee of 6.25% of the total annual cost is charged when payment is made by 12 equal monthly installments. The service fee is included in the monthly payments.

(b) Calculate:

(i) the service fee

(ii) the amount of each monthly installment.

Reference no: EM131071186

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