for the most part I understand this question, but i'm missing something. Any help would be appreciated.
"Dipper has a 10 year increasing annuity immediate that pays
$100 at the end of the first year, $200 at the end of the second
year, ... , and $1000 at the end of the 10th year. He exchanges
the annuity for a perpetuity of equal value that pays X at the
end of each year. If the effective annual interest rate is 3%,
find the value of X."
What I did:
Increasing Annuity Immediate = Perpetuity
100(Is)10|.03 = X/i
100[((Annuity Due) - n)/.03] = X/.03
FV Annuity Due = (1+i)[(1+i^n)-1/i] = (1.03)[((1.03)^10 - 1)/.03]
FV Annuity Due = 11.807
100[((11.807) - 10/.03] = X/.03
6023 = X/.03
180.7 = X
$$ 100\;(Ia)_{\overline{10}|3\%}=\frac{X}{3\%} $$ that is $$ X=3\cdot\frac{\ddot a_{\overline{10}|3\%}-10v^{10}}{3\%}=100\left(\ddot a_{\overline{10}|3\%}-10v^{10}\right)=134.52 $$ where $v=\frac{1}{1.03}$ and $\ddot a_{\overline{10}|3\%}=\frac{1-v^{10}}{1-v}=8.79$