Revision as of 13:08, 18 November 2023 by Admin (Created page with "Sam deposits 5000 at the beginning of each year for ten years. The deposits earn an annual effective interest rate of i. All interest is reinvested at an annual effective interest rate of 5%. Sam has 100,000 at the end of ten years. Calculate i. <ul class="mw-excansopts"><li>11.6%</li><li>15.6%</li><li>19.1%</li><li>23.2%</li><li>27.6%</li></ul> {{soacopyright | 2023 }}")
Nov 18'23
Exercise
Sam deposits 5000 at the beginning of each year for ten years. The deposits earn an annual effective interest rate of i. All interest is reinvested at an annual effective interest rate of 5%. Sam has 100,000 at the end of ten years.
Calculate i.
- 11.6%
- 15.6%
- 19.1%
- 23.2%
- 27.6%
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
Nov 18'23
Solution: B
[[math]]
\begin{array}{c}{{5000(10)+50000i(I s)_{\overline{10}|0.05}=100,000}}\\
{{5000i\left \{ \frac{\ddot{s}_{\overline{10}|0.05}-10}{0.05}\right\}=50,000}}\\
i\left \{ \frac{13.206787-10}{0.05}\right \} = 10\\
{{i=0.15592}}
\end{array}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.