Mpho has recently inherited a trust fund that offers two alternatives: she can take a R1 million pay-out now or receive an annual payment of R145 000 at the end of each year for 10 years. If she invests the money, she can receive 7% interest, compounded annually.

Evaluate every option and advise her on which is the better option to take?

Dave and Sandra pool their individual savings of R2 000 each per month and deposit this into a money market account earning 5% interest per annum, compounded annually. 

What will the balance of the account be at the end of five years?

Answer rating: 100% (QA)

SOLUTION 1 Option 1 Take a R1 million payout now This option has a present value equal to the payout ... View the full answer