Another curious and not so ordinary (but methinks unlikely - or is it?) annuity problem for bored problem solver junkies that partly addresses Subhotosh Khan’s conjecture.
6.108 Jeanne has won a lottery that pays $1000 per month in the first year, $1100 per month in the second year, $1200 per month in the third year, etc. Payments are made at the end of each month for 10 years. Using the annual effective rate of 3%, calculate the present value of this prize. Ans. $147,928.85 (Stolen from a GoogleBooks preview of Schaum’s Outlines in Mathematics of Finance by P. Zima and R. Brown - I may have to buy this book one of these days just for these curious problems.)
6.108 Jeanne has won a lottery that pays $1000 per month in the first year, $1100 per month in the second year, $1200 per month in the third year, etc. Payments are made at the end of each month for 10 years. Using the annual effective rate of 3%, calculate the present value of this prize. Ans. $147,928.85 (Stolen from a GoogleBooks preview of Schaum’s Outlines in Mathematics of Finance by P. Zima and R. Brown - I may have to buy this book one of these days just for these curious problems.)
