Revision as of 01:26, 22 November 2023 by Admin (Created page with "The first thing to notice that isn’t entirely apparent is that this is a perpetuity. We nest need to find k, which in this case will be the first yearly payment. This will be: <math display = "block"> K = 7s_{\overline{2}|.11} = 14.77 </math> Next we need to find the yearly interest rate: <math display = "block"> i = (1 + .22/2)^2 – 1 = .2321 r = .09 </math> Since i > r <math display = "block"> \textrm{PV} = k/(i + r) = 14.77/(.2321 - .09) = 103.94. </math>...")
Exercise
Nov 22'23
Answer
The first thing to notice that isn’t entirely apparent is that this is a perpetuity. We nest need to find k, which in this case will be the first yearly payment. This will be:
[[math]]
K = 7s_{\overline{2}|.11} = 14.77
[[/math]]
Next we need to find the yearly interest rate:
[[math]]
i = (1 + .22/2)^2 – 1 = .2321
r = .09
[[/math]]
Since i > r
[[math]]
\textrm{PV} = k/(i + r) = 14.77/(.2321 - .09) = 103.94.
[[/math]]
Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.