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.
