# On 1 November 2020, James was eligible to receive the following three annuities. (a) $2000 per annum

## Question:

On 1 November 2020, James was eligible to receive the following three annuities.

(a) $2000 per annum payable on 1 February each year, with the Final payment to be made on 1 February 2042;

(b) $3200 per annum payable quarterly on 1 January, 1 April, 1 July and 1 October each year, with the Final payment to be made on 1 January 2037;

(c) $1800 per annum payable monthly on the First day of each month, with the Final payment to be made on 1 August 2039.

Immediately after receiving the monthly payment due on 1 November 2020, James asked that these three annuities be combined into a single annuity payable half-yearly on 1 February and 1 August in each subsequent year with the Final payment to be made on 1 February 2042. Find the amount of the revised annuity, given it was calculated assuming an interest rate of 8% per annum effective. Assume all months are of equal length.

**Related Book For**

## Intermediate Accounting

ISBN: 978-0324592375

17th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen