SOA Exam FM Sample Question 27
Study guide: Exam FM-2
An investor pays 100,000 today for a 4-year investment that returns cash flows of 60,000 at the end of each of years 3 and 4. The cash flows can be reinvested at 4.0% per annum effective.
Using an annual effective interest rate of 5.0%, calculate the net present value of this investment today.
- A) –1,398
- B) –699
- C) 699
- D) 1,398
- E) 2,629
Answer this question and see the worked solution