Question

Your company has decided to set up a fund for its employees with an initial payment of Rs 27,500 compounded six-monthly over a four-year period at a six monthly interest of 3.5%.
(a) Calculate the size of the fund at the end of 4 years.
(b) Calculate the effective annual interest rate.
iv) Show that P = A/r. for an ordinary annuity to infinity.

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