Question

Question 2 pts With the rising cost of home insurance, Danilo is thinking about switching insurers. He currently pays. NRMA $28.78 per week. If he was to switch to Allianz. Danilo can choose between paying his insurance premium either at the beginning of the year or the beginning of the fortnight. If the annual premium with Allianz is $2,682.74, what fortnightly payment would be corresponding to paying annually given an interest rate of 86 p.a compounded weekly? $107 20 $104.67 $115.02 $126.17 $118.15

Answer 1

Answer page: 01 What fotnightly payment would be corresponding to paying annually Given APR (R) = 86 compounded frequency weekly (t):52 Effective annual rate Ear (titrley)-1 (1+84.152152-1 times compounded year 1.0832-1 8.32.1, number of payments a year 26 11/26) -) calculated Biweekly rate 4+ 8.321) 0.307929.1. Amount $ biweekly equivalent is the using formula PMT = PVA I 1+{ [1-614736-1)] /v7} where PMT - perfodical payments annual premium in advance n a number of payments (pv) r= rate of interest per period (decimals) PVA Also given 2682.14 1 Annual premium in advance no of year 8 (N) no of payments a year Lt) = 26 Interest rate per period in decimals (m):0.00307929 no o periods in) = nxt » 1X26 = 26

page:-02 calculatins value Formula (10) (n-1) 1 +0.00307929 1.00307929 26-1 0.926015815 (1+0) --- (1.0030 7929) 79293626-17 1+{ [1-4140"(n-1)= 1+(1-0.926015/0.0030) = 25.026378 fortnightly equivalent in advance PVA / 1+ {C1-C1483-60-9][0] 2682.74129.026378 $107.1964 (Rounded to)]$107.20 Therefore option is correct