Gce Model Questions Vol1 2020 Commerce Question 16

An insurance company calculates the premium for a motor policy as follows: a base premium equal to a certain percentage of the sum insured; a loading of \(20\%\) is added to the base premium for administrative costs; a government tax of \(5\%\) is then applied to the loaded amount; finally, a discount of \(10\%\) is offered if the policyholder pays the premium annually in advance. The company wishes to earn a profit equal to \(15\%\) of the sum insured before the discount is applied. If the sum insured is \(2{,}000{,}000\) and the loading and tax rates remain as above, what base‑premium rate (as a percentage of the sum insured) should be used to meet the profit target? Give your answer to one decimal place.