Question: 20. Two annuities have the same present value. The first annuity is a decreasing annual annuity. The first payment is 900, due one year from

20. Two annuities have the same present value. The first annuity

20. Two annuities have the same present value. The first annuity is a decreasing annual annuity. The first payment is 900, due one year from today. Subsequent annual payments decrease by 90 per year. The interest rate is 10% compounded annually. The second annuity provides payments of K per month for 10 years. The first payment is due one month from today. The interest rate is 10% compounded annually. What is K? [Hint: take a decreasing annuity as a level annuity minus an increasing annuity]

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