SOA Exam FM Sample Question 309
Study guide: Exam FM-2
An annuity-immediate provides annual payments of 10 for 20 years. Immediately following the 11th payment, the annuity is exchanged for a perpetuity-immediate of equal value with semi-annual payments. The present values at the time of the exchange are based on an annual effective interest rate of 6%.
The first payment of the perpetuity is K and each subsequent payment is 0.5% larger than the previous payment.
Calculate K.
- A) 1.53
- B) 1.67
- C) 2.37
- D) 3.42
- E) 3.74
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