An annuity certain is payable monthly in advance for 40 years. The annuity is to be...

 

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An annuity certain is payable monthly in advance for 40 years. The annuity is to be paid at the rate of 100 pa for the first 20 years, 120 pa for the next 5 years and 200 pa for the last 15 years. The following expressions (calculated at the effective annual interest rate) have been suggested for finding the present value of the payments as at the commencement date of the annuity. State which of them are correct. (i) a (100 +120vaz + 200v ) 11 (1) 200-80-20 (12) [1] E [1] (111) 100(1+ a)) + 20v (1+ a) +80v 25 (1+ a2)) [1] [Total 3] An annuity certain is payable monthly in advance for 40 years. The annuity is to be paid at the rate of 100 pa for the first 20 years, 120 pa for the next 5 years and 200 pa for the last 15 years. The following expressions (calculated at the effective annual interest rate) have been suggested for finding the present value of the payments as at the commencement date of the annuity. State which of them are correct. (i) a (100 +120vaz + 200v ) 11 (1) 200-80-20 (12) [1] E [1] (111) 100(1+ a)) + 20v (1+ a) +80v 25 (1+ a2)) [1] [Total 3]

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Lets analyze each expression i 100120v20 200v25 This expression represents the present value of the ... View the full answer