Question

1. (4pts) Find the present value, 2 years before the first payment is made, of an inheritance of twenty-year annuity, on which payments are $100 at the beginning of each quarterly year, assuming a nominal rate of interest of 6% convertible monthly, by (1) finding the equivalent interest rate convertible at the same frequency as payments. (2) using the formula ("Fission" method). (Answer: $4,169.15)

Math Interest Theory/ Financial Math

Please Use Formulas

Answer 1

o Equiviveleno interest Reife = 0.50l (2) Present Value = P x 1-6177). EXCLO21 Of Annwny Que NABIL por ino -240 :3 33,33% [ 1-(1.005) 1 xcl.oos)] 0.005 € 33.33 % 21401 280 I El 467509559 $ S the abover vawe will be at the end of two yyears uomo Present vawes 4675.9559 ) - Porn 21 il CHS 4161.59 $ ! f here we hawe consider the chose. Per in installment of 33.33 abecause the interest is convertable monthly so we have used monthily vawe of installment as auertely yawe value is 100$ so Monthly vawe is 33.33 $ )

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