5 One or Several? Consider an annuity payment that will pay 75,000 every six months for 5 full years. Afterwards, the payment will increase to 100,000 every six months, for 5 more years. The relevant interest rate is 7.5% per annum, compounded semi-annually. 5.1. Explain how this annuity is equivalent to the difference of two regular annuities, each starting at time O, one with a maturity of 10 years, one with a maturity of 5 years. Specify in full the details of the two component annuities. 5.2. Using the observation made in the previous part, value the component annuities, and combine these values to get the value of the composite annuity. If you could not identify the two annuities into which the initial annuity can be decomposed, feel free to use any other method to value the initial annuity. Note: Many complex financial instruments can be see as collections of simpler instruments that can be under- stood and/or valued in isolation. In such cases the value of the complex financial instrument emerges by the suitable aggregation of the values of its respective components