QUESTION 3
3.1
Jacob wants to invests R500 000 in a savings scheme for a period
of 4 years with the hope of buying a Range-Rover which is priced
at R750 000.
The options are available to him:
BANK A offers him 14% per annum at simple interest.
BANK B offers him 12.4% per annum, compounded weekly.
3.1.1
Determine the value of Jacob's investment if he opted to invest with
BANK A.
(2)
3.1.2
Determine the value of Jacob's investment if he opted to invest with
BANK B.
(3)
3.1.3
The price of a new Range-Rover is inflation-linked with an average
increase of 8% per annum.
If Jacob chose the best investment, calculate the difference
between the inflated cost of the Range-Rover and the amount he
has saved in four years.
Indicate whether there is a shortfall or surplus if he chooses the
best investment? Show all calculations.
(4)

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