Assuming an interest rate of 12% pa convertible monthly calculate:

(i) The combined present value of an immediate annuity payable monthly in arrears such that the payments are €1,000 pa for the first 6 years and €400 pa for the next 4 years, together with a lump sum of €2,000 at the end of the 10 years.

(ii) The amount of the level annuity payable continuously for 10 years having the same present value as the payment in (i).

(iii) The accumulated values of the first 7 years payments at the end of the 7th year for the payments in (i) and (ii) above.

Answer rating: 100% (QA)

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