An investor decides to purchase a five-year annuity with an annual nominal interest rate of 12% convertible monthly for a price of X.

Under the terms of the annuity, the investor is to receive 2 at the end of the first month. The payments increase by 2 each month thereafter.

Calculate X.

• 2015
• 2386
• 2475
• 2500
• 2524

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

Solution: C

[[math]] 2(Ia)_{\overline{60}|1\%}=2\frac{\ddot{a}_{\overline{{60}|}}^{~}-60 v^{60}}{0.01}=2\frac{45.4-33.03}{0.01}=2,474.60 [[/math]]

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