Revision as of 11:38, 18 November 2023 by Admin (Created page with "An investor decides to purchase a five-year annuity with an annual nominal interest rate of 12% convertible monthly for a price of X. Under the terms of the annuity, the investor is to receive 2 at the end of the first month. The payments increase by 2 each month thereafter. Calculate X. <ul class="mw-excansopts"><li>2015</li><li>2386</li><li>2475</li><li>2500</li><li>2524</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 18'23
Exercise
An investor decides to purchase a five-year annuity with an annual nominal interest rate of 12% convertible monthly for a price of X.
Under the terms of the annuity, the investor is to receive 2 at the end of the first month. The payments increase by 2 each month thereafter.
Calculate X.
- 2015
- 2386
- 2475
- 2500
- 2524
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 18'23
Solution: C
[[math]]
2(Ia)_{\overline{60}|1\%}=2\frac{\ddot{a}_{\overline{{60}|}}^{~}-60 v^{60}}{0.01}=2\frac{45.4-33.03}{0.01}=2,474.60
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.