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Melvin is a recent graduate. It has been his dream toexplore the African continent. He...

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Accounting

Melvin is a recent graduate. It has been his dream toexplore the African continent. He intends to do a lake tour in five years time when he will visit Lake Tanganyika, Lake Victoria, Lake Malawi, Lake Kivu and Lake Turkana. He estimates that he will need to buy a used Toyota (Land Cruiser 76) at R350 000 that has a long-range fuel tank and dual batterysystem. He will also need an additional R25 000 to pay for fuel and supplies. Melvin intends making equal annual payments into a bank account on which he canearn 9,25% interest compounded annually.

Determine the amount Melvin should pay annually tobe able to undertake the tour in five years time. Thefirst payment will be made at the end of this year.

Instead of making equal annual payments, Melvin wantsto make one lump sum payment, investing it at 9,25%interest compounded annually. What should this lumpsum be?

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