An annuity-certain is to be purchased on 1 November 1984 to provide 15instalments, payable 1 September 1985 and thereafter on the first day of eachJanuary, May and September until 1 May 1990 inclusive. The amount of the firstinstalment is to be R1 000 and each subsequent instalment is to be 5% greater thanits predecessor.(i)Calculate the purchase price of the annuity-certain on the basis of aneffective interest rate of 6% per annum.(ii)the annuity.Calculate the interest content of each of the 7th and the 15th instalments of

Annuity Certain- It is an installment that provides the payout in periodic intervals according to…

Answered: (i) Calculate the purchase price of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(i) Calculate the purchase price of the annuity-certain on the basis of an effective interest rate of 6% per annum. (ii) Calculate the interest content of each of the 7th and the 15th instalments of the annuity.