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Q&A Bank 1.31

9

9346776

Member
My solution had a slight difference with the given solution
The increasing annuity of the last 8 years why is it that it is being multiplied by 50 instead of 600. The (a_8 advance @7%) was multiplied by 1050 which I agree with. My question is why (Ia_8 advance @7%) not multiplied by 600
 
If we had 600\(Ia_8\) then the payments would be 600, 1200, 1800, ...
Adding these to the level annuity 1050\(a_8\) payments of 1050 would give total payments of 1650, 2250, 2850, ...
So we can see that this is not correct.

Since the payments go up in 50's the increasing annuity should have 50 in front of it.
 
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