A loan is repaid by annual payments continuing forever, the first one due one year after the loan is taken out. Assume that the effective rate of interest is /.

(a) Find a formula for the amount of the loan if the payments are 1, 2, 1, 2, . .

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(b) Find a formula for the amount of the loan if the payments are 1,2, ...,«, 1,2, ...,«, ...

(c) \i An is your answer to part (b), find limA^. Have you seen n—*oc this before? Where?

AppendixLO1