Calculate the effective annual interest rate

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Question 1 - 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 2 - 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%

Reference no: EM133187239

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