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#1




Actuarial Accumulated Future Value
Hello there, I am studying for MLC and I seem to have run into a wall concerning actuarial accumulated future value. I understand all of the life annuity background and the interest rate adjustment, but do not understand the nPx adjustment factor.
The text I read concerning AFV gave an explanation of AFV in terms of a group of people contributing to a single fund. From that, I understand the adjustment factor since you are likely to receive more money, but I still don't understand the adjustment factor in the case of a single contributor. From what I can gather, money is worth more in the future because you might not live to receive it? Is that right? Any clarification is greatly apprecited. 
#2




Here is my (very nontheory based) explanation. To discount things to present value, they are always worth less than their accumulated value, right? i.e. we multiply by v and p, which are values always less than one, to calculate a present value. So to move to an accumulated value, we have to do the opposite and divide by v (multiply by 1 + i) and divide by p.
Alternatively, you mention that you understand it in the concept of a group of people. Well just use the same concept but in terms of one person. (assume p = .95 and i =.05) If I am alive now and have one dollar, how much will I have in one year? With interest I will have 1.05, but will I be alive? Well.. not quite, only 95% of me will be alive (or I only have a 95% chance of being alive) so I have to divide my 1.05 by the remaining 95% of people that remain in the population. 
#3




So um, did that help?

#5




Ya I think I got it now. Thanks!

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