SOA Exam FM Sample Question 8
Study guide: Exam FM-2
A perpetuity-immediate pays 100 per year. Immediately after the fifth payment, the perpetuity is exchanged for a 25-year annuity-immediate that will pay X at the end of the first year. Each subsequent annual payment will be 8% greater than the preceding payment.
The annual effective rate of interest is 8%.
Calculate X.
- A) 54
- B) 64
- C) 74
- D) 84
- E) 94
Answer this question and see the worked solution