S
Salma
Member
Hi
can someone please help me with April 2015 past paper, question 9.
For the rental income, i chose to work in quarters, so i used an interest rate of (1.12)^.05 -1 = 0.0287 and income of 0.36/4 = 0.09.
So my level annuity was 0.09 * (a-dot dot 4). I then worked in quarters through the calculations for the PV of the income, so my eqn looks like this:
(0.09 * (a-dot dot 4)* v^4) (1+ v^4 * (1+b)^4 + .... + v^16 * (1+b)^16) all @ i = 0.0287
for the 6.8 at time 6, I used the annual int rate (so 6.8 v^6 @12%).
I used 12% for the outgo (-4-0.9v^0.5).
Then, for the final answer, i got:
4.85042 - 3.445 = 0.30827 (1-((1+b)/1.0287))^20)/(1-(1+b)/1.0287))
Looking at the soln, i plugged in b as (1.06835)^0.25 -1 = 0.01666, but the 2 sides dont match up.
Help in working in quarters for this question would be appreciated!
can someone please help me with April 2015 past paper, question 9.
For the rental income, i chose to work in quarters, so i used an interest rate of (1.12)^.05 -1 = 0.0287 and income of 0.36/4 = 0.09.
So my level annuity was 0.09 * (a-dot dot 4). I then worked in quarters through the calculations for the PV of the income, so my eqn looks like this:
(0.09 * (a-dot dot 4)* v^4) (1+ v^4 * (1+b)^4 + .... + v^16 * (1+b)^16) all @ i = 0.0287
for the 6.8 at time 6, I used the annual int rate (so 6.8 v^6 @12%).
I used 12% for the outgo (-4-0.9v^0.5).
Then, for the final answer, i got:
4.85042 - 3.445 = 0.30827 (1-((1+b)/1.0287))^20)/(1-(1+b)/1.0287))
Looking at the soln, i plugged in b as (1.06835)^0.25 -1 = 0.01666, but the 2 sides dont match up.
Help in working in quarters for this question would be appreciated!