An investment of 1000 is to be used to make payments of 10 at the end of the first year, 20 at the end of the second year, 30 at the end of the third year, etc., every year for as long as possible. A smaller final payment is paid one year after the last regular payment. The fund earns an effective rate of interest of 4%. Calculate the amount of the smaller final payment R. (Hint: By doing trial and error, one can find that the last full payment is made at the end of 17th year.)
An investment of 1000 is to be used to make payments of 10 at the end of the first year, 20 at the end of the second year, 30 at the end of the third year, etc., every year for as long as possible. A smaller final payment is paid one year after the last regular payment. The fund earns an effective rate of interest of 4%. Calculate the amount of the smaller final payment R. (Hint: By doing trial and error, one can find that the last full payment is made at the end of 17th year.)
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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