Financial Mathematics → Annuities Payable at Intervals

Annuities Payable at Intervals of Time. When we have interest rate per annum convertible to quarterly.

Example 1.
An investor wants to purchase a level annuity of 190 pounds per annum payable monthly in arrears for 6 years. Find the purchase price, given that it is calculated on the basis of an interest rate of 3.4% per annum convertible quarterly.

Solution
First of all, convert time period from per annum to quarterly.

As we know that, the purchase price (or present value) is