Can anyone please explain me how did we get 2% as annual rate in question 12.17, PDF page 421. Also, what is the relation between the two, 6% and 8%, that the two were subtracted. Thank you in advance for your help.
We have a compound increasing annuity, which can be converted to a level annuity with an approximate rate of 8% - 6% = 2%. This is shown at the end of chapter 7.