• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Used (1+i)^0.5 instead of continuous annuity factor

Y

ykai

Ton up Member
In Ch14~Ch27, we used multiplying (1+i)^0.5 to present annuity become payable continuously or immediately.
Can I use this instead of the continuous annuity factor in loan schedule or project appraisal?Such as paper B 2019/9-Q2&2019/4-Q2.
I have calculated on this way,but answer is just close,not same.
I wonder if I do it,will I get full marks or lose some marks?
 
In short, almost certainly not. We use (1+i)^0.5 as an approximation in later chapters because we are reliant on probabilities and annuity/assurance values from our tables. In the first half of the course we can calculate values accurately and so (1+i)^0.5 should only be used in the early part of the course if you are explicitly asked for an approximate value.
 
You must log in or register to reply here.
Back
Top