Revision as of 21:25, 18 November 2023 by Admin (Created page with "An investor deposits 1000 at the beginning of each year for five years in a fund earning a 5% annual effective interest rate. The interest from this fund can be reinvested at a 4% annual effective interest rate. Calculate the total accumulated value at the end of five years. <ul class="mw-excansopts"><li>5058</li><li>5227</li><li>5436</li><li>5641</li><li>5791</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 18'23
Exercise
An investor deposits 1000 at the beginning of each year for five years in a fund earning a 5% annual effective interest rate. The interest from this fund can be reinvested at a 4% annual effective interest rate.
Calculate the total accumulated value at the end of five years.
- 5058
- 5227
- 5436
- 5641
- 5791
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 18'23
Solution: E
[[math]]
1000(5)+\left[50 s_{\overline{5} \mid 0.04}+50\left[\frac{s_{\overline{5}|.04}-5}{0.04}\right]\right]=5791.22
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.