Pricing
Log in
Sign up
lavanyarao994
Lv1
lavanyarao994
0
Followers
0
Following
0
Helped
Follow
Ask question
Answers
1
Uploads
0
Likes
0
ANSWERS
Published
1
Subjects
Economics
1
You are considering joining a stokvel, which is a savings mechanism widely used in South Africa.
Different schemes have different objectives, but the general principle is that members of the stokvel
make a monthly contribution to a central fund which is used to cover unusual expenses (such as a
funeral), or pay a ‘windfall’ to the members on a rotational basis. It is a form of mutual financial
assistance, which can be viewed partly as insurance, partly as a savings mechanism and partly as
a means of building social cohesion.
You are mainly interested in the stokvel Mogodiso, which operates according to the rule that each
member contributes R150 per month. The money is banked in an account which receives monthly
interest payments of 0.75% per month. The members are paid out every two years only the sum of
their contributions (no interest), and they have the option of leaving the money in the stokvel.
Assume that you decide that you will leave the money in the stokvel, and withdraw the total amount
of your contributions after 10 years.
An alternative option for you is that you contribute R150 per month to your own savings account
which makes an interest payment of 0.75% per month.
Calculate the following, based on a period of 10 years:
a. What will be the value of your contributions to Mogodiso at the end of 10 years?
b. What will the future value be of your contributions to your savings account?
c. What is the value of the difference and who will get this money? Why might it be important
to you that you make this contribution?
You have
0
free answers left.
Get unlimited access to
3.8 million
step-by-step answers.
Get unlimited access
Already have an account?
Log in
lavanyarao994
Lv1
20 Feb 2023
Answer: 1. Stokvels are savings clubs or groups in South Africa that are typic...
Weekly leaderboard
Start filling in the gaps now
Log in
New to OneClass?
Sign up
Back to top