Exam P Practice Question 935
Study guide: Exam P-1
An annuity pays 1 at the end of each year as long as the annuitant is alive, for a maximum of 3 years. In each year, conditional on the annuitant being alive at the start of the year, the probability of surviving the year is 0.90. A payment of 1 made at the end of year k has present value 0.95^k.
Calculate the expected present value of the annuity payments.
- A) 1.90
- B) 2.10
- C) 2.21
- D) 2.30
- E) 2.50
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