Actuarial Outpost how long will the fund last?
 Register Blogs Wiki FAQ Calendar Search Today's Posts Mark Forums Read
 FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

 Upload your resume securely at https://www.dwsimpson.com to be contacted when our jobs meet your skills and objectives.

 Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

#1
03-11-2014, 11:18 PM
 Logarithum CAS SOA Join Date: Feb 2014 Posts: 3
how long will the fund last?

I have this question says \$10000 is in fund which is accumulating at 5% per annum convertible continuously. If the money continually withdrawn at the rate of \$2000 per annum, how long will the fund last?

I tried to approach the question by setting:

10000 e^0.05 = 2000 (0.05/ln(1.05)) S_angle(n,5%)

I got the answer of 4.68 years.

I thought I can post my work here so I can receive some feedback. Thanks
#2
03-11-2014, 11:24 PM
 Guest Guest Posts: n/a

How does an answer less than 5 years even make sense?
#3
03-11-2014, 11:39 PM
 Logarithum CAS SOA Join Date: Feb 2014 Posts: 3

Quote:
 Originally Posted by Dismal Science How does an answer less than 5 years even make sense?
That's true. I tried to make both FV equal and then solve for n. Probably I'm using the wrong interest rate in S_angle(n,5%)?
#4
03-11-2014, 11:56 PM
 Gandalf Site Supporter Site Supporter SOA Join Date: Nov 2001 Location: Middle Earth Posts: 31,043

For FV, did you mean 10000 e^0.05n
#5
03-12-2014, 12:10 AM
 Logarithum CAS SOA Join Date: Feb 2014 Posts: 3

Quote:
 Originally Posted by Gandalf For FV, did you mean 10000 e^0.05n
Probably this is what I missed. Because the current setup of the LHS is the continuous compounding for the first year only

Last edited by Logarithum; 03-12-2014 at 01:13 AM..