You Have Just Purchased a Life Insurance Policy That Requires

Multiple Choice

You have just purchased a life insurance policy that requires you to make 40 semi-annual payments of R350 each, where the first payment is due in 6 months.The insurance company has guaranteed that these payments will be invested to earn you an effective annual rate of 8.16 percent, although interest is to be compounded semi-annually.At the end of 20 years (40 payments) , the policy will mature.The insurance company will pay out the proceeds of this policy to you in 10 equal annual payments, with the first payment to be made one year after the policy matures.If the effective interest rate remains at 8.16 percent, how much will you receive during each of the 10 years?

A) R6,113.20
B) R5,244.62
C) R5,792.21
D) R4,992.39
E) R4,723.81