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CM1 September 2020 past paper - pthly annuities questions

D

Danny

Active Member
Hi,

Can I just check why in Q6) i) we don't multiply the pthly annuity a^((4))_n\bar| by 4? My understanding is that a pthly annuity pays 1/p per time period i.e per annum.

I also don't understand why in q5 we didn't multiply the 4,000 a^((4))_4\bar| by 4 as well, as this is also a quarterly annuity.

It seems on some questions we multiply them, such as with loan schedule questions when calculating monthly repayments, and in some we don't!

If you are able to provide guidance on this it would help immensely.

Thanks!
 
Danny said:
Hi,

Can I just check why in Q6) i) we don't multiply the pthly annuity a^((4))_n\bar| by 4? My understanding is that a pthly annuity pays 1/p per time period i.e per annum.

I also don't understand why in q5 we didn't multiply the 4,000 a^((4))_4\bar| by 4 as well, as this is also a quarterly annuity.

It seems on some questions we multiply them, such as with loan schedule questions when calculating monthly repayments, and in some we don't!

If you are able to provide guidance on this it would help immensely.

Thanks!
Click to expand...
Hi Danny,

I believe when using the pthly annuity we multiply by the payment each year, not by p. it seems your appraoch is to work in years, for this i would multiply by the amount of the payment each year *a^p_n], so in this case the payment each year was 5 million i believe so we multiplied by 5.

Hope this helps
 
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