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Sir
i am using the formula shown in the answer to Seal island BPP84
When applying it elsewhere I am not reaching the same number as the tables
13% 5 years
Example PV table 13%: 1/1.13p5 = .543 and with calculator same answer
Annuity table 13% 5 years 3.517
Calculator 1-(1.13)p5/.13 = 6.48
1.13p5 = 1.842 -1 = .842/.13 = 6.48
Ok, i see I wasn’t doing a -n, however I notice the formula in the BPP 84 Seal Island does not use -n
Can you clear that up pleaseI only have the current edition of the BPP Revision Kit, and it does not contain Seal Island.
If you are referring to the formula given in the question then this applies to an inflating annuity and this is the only question ever where it has been relevant (it was a question asked by the previous examiner – I do not think that the formula will ever be relevant again in the exam!)
For normal annuities (which obviously are relevant) you are of course given the formula at the top of the discount tables.
Jeez and I missed it all this time, hunting through the internet, the study text etc etc etc
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