EXAMPLE:A BUSINESSMAN BORROWED P500,000 WITH INTEREST AT THE RATE OF 8% COMPOUNDED SEMI-ANNUALLY. HE AGREES TO DISCHARGE HIS OBLIGATION BY PAYING A SERIES OF 8 EQUAL SEMI-ANNUAL PAYMENTS, THE FIRST BEING DUE AT THE END OF 5/½ YEARS. FIND THE SEMI- ANNUAL PAYMENT. SOLUTION:P1 = A[(1+i) – 1]________ (1 + i) n i P1= A[(1.04)8-1]Continue reading “Deferred Annuity”
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