

FlashChat  Actuarial Discussion  Preliminary Exams  CAS/SOA Exams  Cyberchat  Around the World  Suggestions 

Financial Mathematics Old FM Forum 

Thread Tools  Search this Thread  Display Modes 
#1




Perpetuity question
The present value of a perpetuity paying 1 every two years with first payment due immediately is 7.21 at an annual effective rate of i.
Another perpetuity paying R every three years with the first payment due at the beginning of year two has the same present value at an annual effective rate of i + 0.01. Calculate R. (A) 1.23 (B) 1.56 (C) 1.60 (D) 1.74 (E) 1.94 My approach: Since the first payment is at t=2, I want the perpetuity formula to be at t=0 or t=3. I chose t=3. What did I do wrong? Edit: Answer is D Last edited by Futon; 11202017 at 05:34 PM.. 
Thread Tools  Search this Thread 
Display Modes  

