Question: A contract can be fulfilled by making an immediate payment of $21,100 or equal payments at the end of every sixmonths for 4 years. What

A contract can be fulfilled by making an immediate payment of $21,100 or equal payments at the end of

every sixmonths for 4 years. What is the size of the semi-annually payments at 5.3% compounded semi anually?

MATH1002 - Mathematics of Finance Annuity Formulas n = #years x m Chapter 11: FV = PM7 (1+1)" -1 FV = PV(1+1)" PV = PMT | 1-(1+1)"] PV = FV(1+1)" Chapter 12: Recall: 12 = (1+ 1)" 1 /2 - 1 "Equivalent rate of interest per payment period" (where my = number of compounding periods per year, and me = number of payments per year) Finding "PMT": to find the periodic PMT, simply rearrange the annuity formulas for FV and PV. Chapter 13: FV(due) = PMT (1+1" -1 x(1+0) PV(due) = PM7 1-(1+0* * (1+1) Chapter 13 - Perpetuities: PV (Perpetuity) = PMT PV(due) = PMT + PMT i

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