. He would need to save RM__________ today to have this sum assured.

To determine how much Thompson must set aside today to ensure he receives RM60,000 per year for 10 years with an adjusted rate of return of 2%, we will first need to calculate the present value (PV) of the annuity payments. Here is how you can do it using a financial calculator: 1. **Set the calculator to Beginning mode:** Since he wants to start receiving payments immediately (at the beginning of each period). 2. **Enter the annuity details:** - \( PMT = RM60,000 \) (annual payment) - \( I/Y = 2 \) (annual interest rate) - \( N = 10 \) (number of years) 3. **Calculate PV (Present Value):** Using the financial calculator in Beginning mode, input the following: - PMT = 60,000 - I/Y = 2 - N = 10 Then, compute for PV (Present Value). The result for PV should be approximately RM552,669. So, Thompson would need to set aside approximately **RM552,669** today. Next, you need to account for the one-time buffer for traditional treatment cost: 4. **Add the one-time RM80,000:** This is required immediately for treatment costs. Therefore, total critical illness sum assured would be: - Annuity PV: RM552,669 - Additional traditional treatment cost: RM80,000 Adding these together gives: Total Critical Illness Sum Assured = RM552,669 + RM80,000 = **RM632,669** So, summarizing: - Thompson would need a critical illness sum assured of approximately **RM552,669** to cover the annual payments of RM60,000 for 10 years. - Including an additional RM80,000 for treatment costs, the total critical illness sum assured would be approximately **RM632,669**.

To calculate the present value of Thompson's desired critical illness sum assured, we will need to use the time value of money formula. In this case, we have a series of equal payments (annuity). Thompson would like to receive RM60,000 per year over a period of 10 years. The adjusted rate of return is 2%. First, we will find the present value of the annuity. PV = PMT * [(1 - (1 + r)^(-n)) / r] Where: - PV = present value - PMT = payment amount per period (RM60,000) - r = interest rate per period - n = number of periods In this case: - PMT = RM60,000 - r = 0.02 (2% expressed as a decimal) - n = 10 PV = RM60,000 * [(1 - (1 + 0.02)^(-10)) / 0.02] PV = RM60,000 * [(1 - 0.8205) / 0.02] PV = RM60,000 * [0.1795 / 0.02] PV = RM60,000 * 8.9724 PV = RM538,346 Thompson would need a critical illness sum assured of RM538,346, but he would also like an additional RM80,000 for traditional treatment costs. To find the total critical illness sum assured, we add the two values: Total critical illness sum assured = RM538,346 + RM80,000 Total critical illness sum assured = RM618,346 Thompson would need a critical illness sum assured of RM538,346, plus an additional RM80,000 for traditional treatment cost. Therefore, his total critical illness sum assured would be RM618,346.