SOA Exam FM Sample Question 201
Study guide: Exam FM-2
You are given the following information about a perpetuity with annual payments:
i) The first 15 payments are each 2500, with the first payment to be made three years from now.
ii) Beginning with the 16th payment, each payment is k% larger than the previous payment.
iii) Using an annual effective interest rate of 3.5%, the present value of the perpetuity is 115,000.
Calculate k.
- A) 1.66
- B) 1.74
- C) 1.78
- D) 1.83
- E) 1.89
Answer this question and see the worked solution