SOA Exam FM Sample Question 253
Study guide: Exam FM-2
You have the option of purchasing one of the following two annuities-immediate:
- i) The first annuity makes annual payments of 1000 for 20 years.
- ii) The second annuity is a perpetuity that also has annual payments. The payment in each of the first 10 years is 600. Beginning in year 11, the payments increase to 1200, and remain at 1200 forever.
At an annual effective interest rate of i > 0, both annuities have a present value of X.
Calculate X.
- A) 8700
- B) 8750
- C) 8800
- D) 8850
- E) 8900
Answer this question and see the worked solution
Concepts tested
- Annuities
- Level Annuity
- Present Value
- Perpetuity
- Annuity Immediate
- Level Payment Annuity
- Term of Annuity