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At an effective annual interest rate i, i > 0, each of the following two sets of payments has present value K:

a. A payment of 121 immediately and another payment of 121 at the end of one year
b. A payment of 144 at the end of two years and another payment of 144 at the end of three vears.

Calculate i.

Respuesta :

Answer:

Hence the calculated

Step-by-step explanation:

Now,

[tex]121+121v=144v^{2} + 144 v^{3} =K\\121(1+v)=144v^{2} (1+v)\\v^{2} =\frac{121}{144} \\\\v=\frac{11}{12}[/tex]

Then K is calculated as,

[tex]K=121(1+v)\\K=121(1+\frac{11}{12} )\\K=\frac{121(23)}{12} \\\\K= 231.916[/tex]

Here we get,

[tex]i=\left | \left ( \frac{v-1}{v} \right ) \right |\\i=\left | \frac{\frac{11}{12}-1}{\frac{11}{12}} \right |\\i=\frac{1}{11}[/tex]

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