Hello guys....I hope y'all doing great Could anyone try doing question no 11 using year periods... And why are they using 3 if the payments are made quarterly???
There are 3 months in a quarter. PS It's always helpful to give the exam question reference in the title and you are asking about the examiners solution but don't include a screen shot of that - which means you are expecting students to guess which exam paper it is and then look it up. This is why you've not got any responses.
Thanks for the insight... I am sorry I did not include the reference. It is a sept 2002 paper question no 11 and I have taken a screenshot of the examiner
Interest rate of 8% p.a. convertible quarterly is equivalent to an effective quarterly interest rate of 2%. If monthly payment is done for 15 years, this means there will be 15*4=60 quarterly payments in total. Now, observe carefully that the question talks about "monthly" arrear payments/ "monthly" increase in arrear payments. In one quarter, there are 3 months. Hence i(3) is used. Hope your query is clarified now.
