Problem 3 (3 points). A geometrically increasing annuity-immediate is an annuity that does not make level payments, but rather makes payments of P at the end of the first term, P(1 +j) ai the end othe cod term, ..., and '( i*a the end of the: kth period. Assame thai the annual effective rate of interest isi (1) Show that the present value of a geometrically increasing annuity immediate is 1+j"' where i (Recall that the notation an means that the annuity-immediate present value is calculated with interest rate i*) (2) Consider a 10 year geometrically increasing annuity-immediate with initial payment of $100 and second payment of $110 and payments at the end of each year. Suppose that the effective annual interest rate is 5%. What is the present value of this annuity? Problem 3 (3 points). A geometrically increasing annuity-immediate is an annuity that does not make level payments, but rather makes payments of P at the end of the first term, P(1 +j) ai the end othe cod term, ..., and '( i*a the end of the: kth period. Assame thai the annual effective rate of interest isi (1) Show that the present value of a geometrically increasing annuity immediate is 1+j"' where i (Recall that the notation an means that the annuity-immediate present value is calculated with interest rate i*) (2) Consider a 10 year geometrically increasing annuity-immediate with initial payment of $100 and second payment of $110 and payments at the end of each year. Suppose that the effective annual interest rate is 5%. What is the present value of this annuity