Hello, This is my first time on this forum. I am learning CT1 right now. Could somebody explain me the meaning of this equation and how we come to know that these two equal each other. Thank you
Suppose you are working in years. The first annuity says you are receiving a payment of 1 per time unit payable in p instalments for n time units at interest rate i. For example it might be £1 per year payable in 12 monthly instalments at 10% pa for 8 years. The second annuity says you are receiving a payment of 1/p per time unit for n time units payable once per unit for np units at interest rate i(p)/p. For example it might be £1/12 per month payable once per month for 12*8=84 months at 2.1384...% per month. They are both equivalent - just one is working in years whereas the other is in months.
