q1.18 from part 1

q1.22 from part 1

Q1.22
Calculate the accumulated value as at 1 January 2008 of a series of payments of £100 paid every two years from 1 January 1968 to 1 January 2006 inclusive, which accumulate at 12% pa.

accumulated value=

= 100*(1+I)^2 + 100*(1+I)^4+..............+100*(1+I)^20

= 100*(1+I)^2* [1+(1+I)^2+..........................+(1+I)^18 ]

is this correct equation?

can we find answere by working in year? for that rate should be 12%pa.
is this correct?

regards

mayuresh

 

It looks to me like you are trying to work in years.

The first term you have (100(1+I)^2) is the accumulated value at 1/1/08 of the payment of 100 on 1/1/06 (2 years earlier).

In that case I is the annual effective rate of interest 12%.

Your error is that the final term in your sum should be 100(1+I)^40, which is the accumulated value at 1/1/08 of the first payment of 100 on 1/1/68 (40 years earlier).