With the rising cost of home insurance, Danilo is thinking about switching insurers. He currently pays...

With the rising cost of home insurance, Danilo is thinking about switching insurers. He currently pays NRMA $28.78 per week. If he was to switch to Allianz, Danilo can choose between paying his insurance premium either at the beginning of the year or the beginning of the fortnight. If the annual premium with Allianz is $2,682.74, what fortnightly payment would be corresponding to paying annually given an interest rate of 8% p.a. compounded weekly?

Expert Solution

The number of biweekly premium a year is assumed as 26.

Interest rate of 8% compounded weekly is equivalent to biweekly rate of 0.307929% as follows:

Fortnightly equivalent premium= $107.20 as follows:

jeff jeffy answered 2 years ago

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