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Assignment X2 X2.5

M

macytong

Member
i tried to find out the amount of loan by grouping 2 years as one term, so I calculate by
160 a(p:2)8 + 40 ia(p:2)8 @i=10.25%
=160*i/i(2)*(1-v^8)/i + 40*i/i(2)*(((1+i)(1-v^8)/i-8v^8)/i) and get 3465 which is double the model answer. what is wrong with my calculation?

Thank you.
 
The pthly increasing annuity formula (which isn't in the Core Reading) actually does level payments each year and then increases at the end of the year. So the payments would be 20, 20, 40, 40, 60, 60, ...
 
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