Two annuities - certain of 1 p.a. are each payable half-yearly for n years. The first payment under one is due at the end of 3 months and under the other at the end of 6 months from now. The total present value of the two annuities is 20.255. The amount of an annuity of 1 per quarter in arrear for n years is 47.719. If the same effective rate of interest applies throughout, find n and the rate of interest.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Two annuities - certain of 1 p.a. are each payable half-yearly for n years.
The first payment under one is due at the end of 3 months and under the other at
the end of 6 months from now. The total present value of the two annuities is
20.255.
The amount of an annuity of 1 per quarter in arrear for n years is 47.719.
If the same effective rate of interest applies throughout, find n and the rate of
interest.
Transcribed Image Text:Two annuities - certain of 1 p.a. are each payable half-yearly for n years. The first payment under one is due at the end of 3 months and under the other at the end of 6 months from now. The total present value of the two annuities is 20.255. The amount of an annuity of 1 per quarter in arrear for n years is 47.719. If the same effective rate of interest applies throughout, find n and the rate of interest.
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