M
MHKKHM
Member
can some one help me in this question 1.37 pg-13 ques bank.
why have they taken 200-10t while doing integration.
thanks
why have they taken 200-10t while doing integration.
thanks
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J
Jinnentonix
Member
This is because 200-10t is the continuous rate of payment which needs to be summed up by use of integrals.
M
MHKKHM
Member
But 200- 10t is no where in the question. . Where did they get from?
M
MHKKHM
Member
J
Jinnentonix
Member
You're actually quite close to getting the right answer. 
Basically, the question says that the annuity is initially paid at a rate of $200 pa (continuously) but decreases linearly to $100 pa after 10 years. This means that the rate of payment is 200 - 10t where t is the time elapsed in years.
It appears that your calculation does not factor in the decreasing component. Your calculation would otherwise be correct if the annuity was simply paid at a rate of $200 pa without any adjustment over time.
Hope that helps!
Basically, the question says that the annuity is initially paid at a rate of $200 pa (continuously) but decreases linearly to $100 pa after 10 years. This means that the rate of payment is 200 - 10t where t is the time elapsed in years.
It appears that your calculation does not factor in the decreasing component. Your calculation would otherwise be correct if the annuity was simply paid at a rate of $200 pa without any adjustment over time.
Hope that helps!
M
MHKKHM
Member
Thank you so much