Actuarial Outpost Module 2 Sample Exam Problems #22
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#1
04-06-2012, 03:58 PM
 psugirl2011 Member SOA Join Date: Feb 2012 Studying for MFE College: PennState2011Grad Posts: 92
Module 2 Sample Exam Problems #22

An annuity pays 1 at the end of each year for n years. Using an annual effective interest rate of i, the accumulated value of the annuity at time (n+1) is 13.776. It is also known the (1+i)^n=2.476. Calculate n.

Solution
Here we have unknown n and i, which indicates that we cannot find the answer directly with the calculator. The annuity in this question is a unit annuity. We are given the accumulated at time n+1 of an n-period annuity. That accumulated value is (future value of annuity immediate)(1+i)=13.776. With some algebra we can use this to find i.

Am I missing something? Why is the accumulated value the formula for a future annuity due? When the payments are made at the end of each year.
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#2
04-06-2012, 04:04 PM
 BLBarK Member CAS Join Date: Sep 2011 Location: Columbus, OH Studying for Exam 3L and 4/C College: Senior year Favorite beer: Sierra Nevada Posts: 440

How do you find the AV of an annuity one period after the last payment? =)

S(doubledot)-angle-n. Plug in (1+i)^n=2.476 into the formula to get d (which you can convert to i). Then you can solve for n.
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Last edited by BLBarK; 04-06-2012 at 04:08 PM..

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