3. [14 marks] (a) [5 marks] Let n be the number of payment periods, i be the interest rate per conversion period and R b

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3 14 Marks A 5 Marks Let N Be The Number Of Payment Periods I Be The Interest Rate Per Conversion Period And R B 1 (101.19 KiB) Viewed 41 times

3. [14 marks] (a) [5 marks] Let n be the number of payment periods, i be the interest rate per conversion period and R be the amount of each periodic payment. Let A denote the present value of an ordinary annuity. Show that A Rami 1- (1 + i)-n where an = i (b) [4 marks] Use part (a) to show that the present value of a complex ordinary annuity is 1 Racni Sai where c is the number of interest periods in one payment interval (1 + i)n − 1 and Smi i (c) [5 marks] A garage is sold for €2,000 down and 48 monthly pay- ments of €300. If money is worth 8% compounded quarterly, find the cash value of the garage. =