Asked Nov 10, 2019

Karen and Mike pay $700 and $900 a year on seperate insurance. If they used same company save 10%. Whatsd the future annual savings over 10 years based on annual interest rate of 4%?


Expert Answer

Step 1

Calculate the annual savings as follows:


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Annual savings (K's Insurance+ M's Insurance)x% premium ($700+$900) x10% =S1,600x10% =S160

Step 2

Calculate the total amount of saving...


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(1+r)"- Total amount of savings Annual savings x (1+0.04)0- =$160x 0.04 1.48024428491834-1 -$160 x 0.04 0.48024428491835 =S160x 0.04 -$160 x12.0061071229586 =$1,920.97713967338 or S1,920.98


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