Question

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

Answer 1

Answer:

Hence the calculated

Step-by-step explanation:

Now,

$121+121v=144v^{2} + 144 v^{3} =K\\121(1+v)=144v^{2} (1+v)\\v^{2} =\frac{121}{144} \\\\v=\frac{11}{12}$

Then K is calculated as,

$K=121(1+v)\\K=121(1+\frac{11}{12} )\\K=\frac{121(23)}{12} \\\\K= 231.916$

Here we get,

$i=\left | \left ( \frac{v-1}{v} \right ) \right |\\i=\left | \frac{\frac{11}{12}-1}{\frac{11}{12}} \right |\\i=\frac{1}{11}$