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.

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.