SOA Exam FM Sample Question 85
Study guide: Exam FM-2
A perpetuity provides for continuous payments. The annual rate of payment at time t is
\begin{cases}1, & \text{for } 0 \le t < 10,\\ (1.03)^{t-10}, & \text{for } t \ge 10.\end{cases}
Using an annual effective interest rate of 6%, the present value at time t = 0 of this perpetuity is X.
Calculate X.
- A) 27.03
- B) 30.29
- C) 34.83
- D) 38.64
- E) 42.41
Answer this question and see the worked solution