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Old 10-11-2017, 04:12 PM
klink klink is offline
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Default HELP WITH ANNUITY OFF-PAYMENT NUMERICAL APPROACH

For the life of me I cannot figure out how to get an answer using numerical approach. I have reread Section 4a to 4c over and over.

Question 1: 100 deposited at the beginning of each 4-year period for 40 years. Account credits annual effective interest i. Accumulated amount at end of 40 years is X which is 5 times accumulated amount at the end of 20 years.

I set up using 4 year payment period with effective interest j=((1+i)^4)-1

Setting (using interest j): 500(s angle 5) = 100(s angle 10), I get j=31.95%.
From j, i=7.18% which is what the solutions show.

When I try to find X @ j=31.95%, i use: X=100(s angle 10)= 4701.52

The correct answer is supposed to be 6195.

The solution shows the symbolic approach setting up the problem as:
100(s angle 40/a angle 4)=500(s angle 20/a angle 4) which also yields i=7.18%

Then they use X=100(s angle 40/a angle 4) @ i=7.18%, X=6195

Please help me figure out where I am going wrong when trying to solve for X using the numeric approach!!!!!!!!!!!!!
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Old 10-11-2017, 04:30 PM
Academic Actuary Academic Actuary is offline
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Payments are beginning of each interval so double dot the s's. Also your 4701.56 should be 4694.53, the multiply by 1.3195.
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