An n-year annuity, with a payment of 1 at the end of each year, has a present value of 5.5554 at an annual nominal interest rate, convertible m times per year. Also:

1. j is the effective rate of interest per interest conversion period, and
2. [math](1+j)^m = 1.0614 [/math]

Calculate n.

• 7
• 8
• 9
• 10
• There is insufficient information to calculate n

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Solution: A

[[math]]\begin{aligned} & 5.5554=\frac{1-\left(\frac{1}{1.0614}\right)^n}{0.0614} \\ & n=7\end{aligned}[[/math]]

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.