Problem:
A fifteen-year annuity pays $1400 + 300k on the first day of the k ? th month of the year. Thus it pays $1700 each January 1, $2000 each February 1,..., $5000 each December 1. The first payment is on a January 1.
Required:
Question: Find an expression for the value of this annuity just before the first payment and evaluate it if the annual effective interest rate is 3%.
Note: Please describe comprehensively and provide step by step solution.