Rudi needs an amount of R400 000 (today’s value) to buy a new car in 7 years’ time. The price of the car will increase by 7% per annum and any investment that he makes will grow at an interest rate of 9.5% per annum. He wants to invest by way of annual instalments to buy the car in 7 years’ time. The instalments must increase by 6.5% per annum. 

The instalment that he must make at the beginning of Year one, is (rounded to the nearest Rand):

Answer rating: 100% (QA)

To calculate the annual installment that Rudi must make at the beginning of Year one we can use the concept of present value and future value Lets bre... View the full answer