4. An annuity of R1000 per annum from 1984 to 1988 inclusive, and R1200 per annum from 1989 to 1993 Inclusive, is to be paid in equal half-yearly instalments on the 30th June and 31st December of each year. An intending purchaser of the annuity at 1st January, 1978 wishes to realize an effective rate of interest of 5% per annum on the whole of his investment, and to replace his capital by the end of 1993 by a level sinking fund to accumulate at an effective rate of Interest of 4% per annum. What price should he pay? 9

4. An annuity of R1000 per annum from 1984 to 1988 inclusive, and R1200 per annum from 1989 to 1993 Inclusive, is to be paid in equal half-yearly instalments on the 30th June and 31st December of each year. An intending purchaser of the annuity at 1st January, 1978 wishes to realize an effective rate of interest of 5% per annum on the whole of his investment, and to replace his capital by the end of 1993 by a level sinking fund to accumulate at an effective rate of Interest of 4% per annum. What price should he pay? 9

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...

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