SOA Exam FM Sample Question 70
Study guide: Exam FM-2
College tuition is 6000 for the current school year, payable in full at the beginning of the school year. College tuition will grow at an annual rate of 5%. A parent sets up a college savings fund earning interest at an annual effective rate of 7%. The parent deposits 750 at the beginning of each school year for 18 years, with the first deposit made at the beginning of the current school year. Immediately following the 18th deposit, the parent pays tuition for the 18th school year from the fund.
The amount of money needed, in addition to the balance in the fund, to pay tuition at the beginning of the 19th school year is X.
Calculate X.
- A) 1439
- B) 1545
- C) 1664
- D) 1785
- E) 1870
Answer this question and see the worked solution
Concepts tested
- Geometric Increasing Annuity
- Annuity Due
- Accumulated Value
- Geometric Progression
- Non-level Annuities