Financial Mathematics Part III
From Fall 2010 Final Exam, Short Answer Question 5 a)
Assume you deposit $R into ordinary Annuity 1 at the end of every 6 months after your
18th birthday up to and including your 40th birthday (thus you make 44 deposits).
Interest is 4% APR compounding semi-annually. After your last deposit at age 40, no
further deposits into Annuity 1 are made and its value is then left to accumulate interest
at 6% APR compounding semi-annually up to and including your 60th birthday.
At the end of each year starting after your 50th birthday, you now deposit $(R+1500)
into ordinary Annuity 2 up to and including your 60th birthday (thus y