Actuarial Outpost Interest Calculation question
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#1
07-08-2011, 08:31 AM
 Samantha Member SOA Join Date: Jan 2005 Posts: 6,019
Interest Calculation question

Okay, I'm about ready to turn in my actuarial credentials and open a dog grooming business! Why can't I match this table???

"Present value of annuity certain of $1 per week. Interest at 5% per annum with annual rests. Payment at end of week 365.2425 days to a year." What is the PV formula for X number of weekly payments? And why can't I hit it? (Okay, don't answer the second question!) __________________ There is only one success: To be able to spend your life in your own way. That's a very interesting argument. But I'm afraid you are a moron. -- The Drowsy Chaperone #2 07-08-2011, 08:34 AM  snikelfritz Member Join Date: Jun 2011 Location: Yep Studying for Nope Favorite beer: Yep Posts: 5,415 They're probably over simplifying the interest, you're probably compounding it weekly. I refuse to give any actual guidance for fear of doing it wrong. __________________ Quote:  Originally Posted by Devil's Advocate If you make seducing females your sole purpose in life you will stop evolving into a higher being and just end up with a useless shiny tail. #3 07-08-2011, 08:42 AM  Inconceivable Now 20% less conceivable! Join Date: Nov 2007 Posts: 24,059 Blog Entries: 2 Ok I haven't looked at FM material for many years but isn't this just the a angle n formula? What are you doing? And what are the answers that you should be getting? Insert more info please! #4 07-08-2011, 08:43 AM  Samantha Member SOA Join Date: Jan 2005 Posts: 6,019 Yes, I should have clarified: I'm trying to hit the effective interest rate. It really shouldn't be this hard, right? __________________ There is only one success: To be able to spend your life in your own way. That's a very interesting argument. But I'm afraid you are a moron. -- The Drowsy Chaperone #5 07-08-2011, 08:44 AM  SamTheEagle Member Join Date: Aug 2005 Posts: 49,901 This is exactly why girls shouldn't be allowed to do math. #6 07-08-2011, 08:49 AM  Noddy Member Join Date: May 2007 Posts: 2,179 a angle n (n in weeks, i=weekly effective) effective weekly rate is .05/52 effective annual = (1+.05/52)^52 -1 = .051245842 what does annual rests mean? __________________ Ridicule is the only weapon which can be used against unintelligible propositions. - Thomas Jefferson #7 07-08-2011, 08:50 AM  Keep It Real, Yo Member CAS Join Date: Sep 2008 Studying for CAS 9 Favorite beer: Blue Moon and Shock Top Posts: 15,803 Quote:  Originally Posted by SamTheEagle This is exactly why girls shouldn't be allowed to do math. And also exactly why they should be allowed to do Sam __________________ Vomik: will you... will you be my life coach? #8 07-08-2011, 08:53 AM  _BullDog_ Member Join Date: Jul 2004 Favorite beer: Samuel Smith Oatmeal Stout Posts: 22,446 Quote:  Originally Posted by Samantha ... And why can't I hit it? ... Quote:  Originally Posted by snikelfritz .... I refuse to give any actual guidance for fear of doing it wrong. interesting... __________________ God is Great - Beer is good - People are crazybulldogbrute.mybrute.c #9 07-08-2011, 08:53 AM  Samantha Member SOA Join Date: Jan 2005 Posts: 6,019 Quote:  Originally Posted by SamTheEagle This is exactly why girls shouldn't be allowed to do math. Oh shut up! the weekly rate they are using is 0.0009582675 how did they get that? __________________ There is only one success: To be able to spend your life in your own way. That's a very interesting argument. But I'm afraid you are a moron. -- The Drowsy Chaperone #10 07-08-2011, 08:53 AM  Ginormous76 Member Join Date: Feb 2008 Posts: 23,683 Quote:  Originally Posted by Samantha Okay, I'm about ready to turn in my actuarial credentials and open a dog grooming business! Why can't I match this table??? "Present value of annuity certain of$1 per week. Interest at 5% per annum with annual rests. Payment at end of week 365.2425 days to a year." What is the PV formula for X number of weekly payments? And why can't I hit it? (Okay, don't answer the second question!)
Is it not
$\frac{1-v^n}{i}$
Where n = x payments
i = .0009387
v = 1/(1+i)

They could have used i = .05/52 to simplify.
__________________
Rubber ducky, you're the one!

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