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Answer :
The large counts condition is checked to ensure the accuracy of the annuity payment calculation when the number of periods is sufficiently large.
What is the Large Counts Condition?
The large counts condition is checked to ensure the accuracy of the formula used to calculate the present value of an ordinary annuity. This condition is satisfied when the number of periods (n) is sufficiently large.
By checking this condition, we can ensure that the formula provides an accurate estimate of the annuity payment. In the given problem, the large counts condition is satisfied since the investment period is 20 years or 240 months, which is considered a sufficiently large number of periods.
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