lestion $2$

$($a$)$ ABC Ltd expects to sell $20,000$ policies and the net cost of claims is estimated at

$5,000,000.$ The estimated costs of running the company $($commission$,$ salaries, rent,

promotion, taxation and cost of reinsurance$)$ are $2,500,000.$ The stakeholders are

expecting a return of $750,000$ on their investment. Calculate the contribution of each

of the $20,000$ policyholders $($premium$).$

$(4$ marks$)$

$($b$)$ Joan returns from a business trip to New York with $$1,200.$ She changes them back to

euro's $($EUR$/$USD $=1\mathrm{.}12).$ How many euros does she get back? $($Give your answer to

the nearest euro$)$

$(4$ marks$)$

$($c$)$ Peter has a gross income of $80,000.$ His tax credits for the year are $3,700.$ The

standard rate cut$-$off point is $38,500.$ The standard rate of tax is $20\%$ and the higher

rate is $40\%.$ After tax is paid, what is Peter's income for the year?

$(6$ marks$)$

$($d$)$ The Newell family wish to insure their house for $800,000$ and their contents for

$150,000.$ They were given the following quotation: House insurance $4$ per $1,000$

and contents $1\mathrm{.}65$ per $1,000.$ They will receive deductions on contents insurance of

$10\%$ for having a house alarm. Calculate their total premium.

$(6$ marks$)$

$($e$)$ XYZ Insure Ltd has two fire policies with different insurers. Policy A sum insured is

$360,000$ and Policy B sum insured is $240,000.$ In the event of a loss amounting to

$180,000,$ how much will each insurer pay?

$(5$ marks$)$

Total $(25$ marks$)$

uestion $3$

$($a$)$ A sum of $65,000$ is invested at an AER of $1\mathrm{.}8\%.$ Calculate the value of the investment

in $4$ years' time. $($Give your answer to the nearest euro$)$

$($b$)$ If you earn $15,400$ over $5$ years on an investment that pays an AER of $4\mathrm{.}5\%$ what was

the initial amount that you started with? $($Give your answer to the nearest euro$)$

$(5$ marks$)$

$($c$)$ A bond offers a return of $12\%$ after $5$ years. Calculate the AER for this bond.

$($Give your answer correct to two decimal places$)$

$5$ marks$)$

$($d$)$ Calculate the monthly mortgage repayment and total interest paid on a mortgage of

$450,000$ over $20$ years if the APR on the loan is $3\mathrm{.}50\%$ per annum. $($Give your answers

to the nearest euro$)$

$(10$ marks$)$