Amy purchases an annuity that will give her payments of R at the end of each quarter for seven years. She will receive the first of these payments in 1.5 years. If Amy paid $50,000 for this annuity and will earn a nominal rate of interest of 6% compounded quarterly, (a) write the equation of value (using the appropriate actuarial notation) for this annuity at the time of purchase. Be sure to indicate the effective rate per payment period being used. (b) find the value of R.
Amy purchases an
(a) write the equation of value (using the appropriate actuarial notation) for this annuity at the time of purchase. Be sure to indicate the effective rate per payment period being used.
(b) find the value of R.
An Annuity Due is a stream of regular periodic payments made at a beginning of period for a specified period of time viz. annually; semi-annually; or monthly in which cash flows of the same amount is received for a number of years that may goes on to infinite numbers.
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