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ABy Admin
Nov 18'23
Exercise
John finances his daughter’s college education by making deposits into a fund earning interest at an annual effective rate of 8%. For 18 years he deposits X at the beginning of each month. In the 16 th through the 19 th years, he makes a withdrawal of 25,000 at the beginning of each year. The final withdrawal reduces the fund balance to zero.
Calculate X.
- 207
- 223
- 240
- 245
- 260
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 18'23
Solution: C
[[math]]
\begin{align*}
(1.08)^{1/12}-1 = 0.006434 \\
\frac{1}{1.08^{15}}25,000 \ddot{a}_{\overline{4}|8\%} = X \ddot{a}_{\overline{216}|0.6434\%} \\
X= \frac{25, 000(3.57710)}{3.17217(117.2790)} = 240.38.
\end{align*}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.