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2 . 3 . 1 8 S Joe can purchase one of two annuities: Annuity 1 : A 1 0 - year decreasing annuity -

2.3.18S Joe can purchase one of two annuities:
Annuity 1: A 10-year decreasing annuity-immediate, with annual payments of 10,9,8,...,1.
Annuity 2: Aperpetuity-immediate with annual payments. The per- petuity pays 1ni year 1,2ni year 2,3ni year 3,.. and 1 ni year
1. After year 1, the payments remain constant ta.1
At an annual effective interest rate of ,i the present value of Annu- ity 2 si twice the present value of Annuity .1 Calculate the value of Annuity 1.

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