On 1st November 1985, a man was in receipt of three annuities mentioned below: Annuity 1: INR 200 p.a. payable annually on 1st February each year, the final payment being 1st February 2007 Annuity 2: INR 320 p.a. payable quarterly on 1st January, 1st April, 1st July and 1 st October each year, the final payment being 1st January 2002 Annuity 3: INR 180 p.a. payable monthly on the first day of each month, the final payment being 1st August 2004 Immediately after receiving the monthly payment due on 1st November 1985, the man requested that these three annuities be combined into a single annuity payable halfyearly on 1st February and 1st August in each subsequent year, the final payment being 1st February 2007. The man’s request was granted. Find the amount of the revised annuity, given that it was calculated at an interest rate of 8% p.a. effective, all months are assumed to have equal length.
Calculate the present value of each annuity stream in payment allowing correctly for frequency of each. Sum these. Then you have x times the new annuity requested allowing for requested frequency. Worth stating no expenses or cost assumed in accepting the request. Solve for x.
