Define a level pay annuity immediate

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a) Define a level pay annuity immediate.

b) Give the formula for the future value of an annuity immediate with n payments of $1 each period if the effective interest rate per period is r.

Alfonso dies and leaves an inheritance of $1800000 to be divided between his son and his grandson. His grandson will receive payments of $P at the end of each year for 20 years. His son will recive payments of $Q at the end of each year for 10 years. The interest rate is 8% compounded semi-annually.

c) If the son's share and the grandson's share are both worth the same amount, find $P and $Q.

d) If instead $Q = $2P, how much is $P and how much is each share worth?

Reference no: EM132577547

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