ACTSC231 Study Guide - Quiz Guide: Problem Set
21 Jun 2019
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In this problem set, we"ll focus mainly on annuities. Here"s a longer explanation: suppose you need to pay today. You pay the interest portion at time 1 so that the time-1 balance is : the interest accrued on the balance over the second year is i. Pay this interest (that is, i) at the end of the second year. The time-2 balance will once again be : continue in this manner so that you pay the interest of i at the end of each year for n years. : so overall, instead of paying today (pv = 1), you can pay at the end of each year for n years (present value. Assume that interest is earned at an annual effective rate of i. You are given that the accumulated value in the account at the end of 40 years is x, which is 5 times the accumulated amount at the end of 20 years.
