Increasing annuities due Q7.10

Hi guys,

I need some help in question 7.10 on page 10 of chapter 7.
Why do we take 40 pounds as level annuity payment instead of using 50 pounds?

Thanks for help!

Warm regards,
Shyam

 

yes beacause 40 pounds is level amount for payments that will be discounted using (a-n) function,while 10 pounds increases in each payment that will be discounted using (Ia-n) function.

 

Thanks for help!