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LJOrozco
LJOrozco
23.03.2020 • 
Mathematics

A perpetuity costs 77.1 and makes annual payments at the end of the year. The perpetuity pays 1 at the end of year 2, 2 at the end of year 3, ..., n at the end of year (n+1). After year (n+1), the payments remain constant at n. The annual effective interest rate is 10.5%. Calculate n.

Since it pays 1 at end of year 2 and increases by 1 til end of year (n+1), I did

(a(double dot angle n+1) * v) / 0.105 = 77.1

When I do this i get n = 18 and I am off by 1 from the correct answer n = 19.

Can someone point out my error here?

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