QUESTION 22 (REFER TO EXAMPLE 1 & 6) Tabulani purchases a car for R250 000
. He has planned to replace the car in 6 years' time. The replacement
cost of the car is expected to rise at 10% p. a. compounded annually and the rate of depreciation of his
current car is 15% p. a. on the reducing-balance method. Jabulani sets up a sinking fund to pay for a new car
in 6 years' time. Calculate:
a) The trade-in value of Jabulani's car in 6 years' time.
(3)
b) The cost of a new car in 6 years' time.
(3)
c) How much Jabulani must have invested in 6 years' time (sinking fund) if he will trade-in his old car?
d) The monthly payments into the sinking fund if interest is earned at 7,5% p. a., compounded monthly.