Textbook Notes (270,000)
CA (160,000)
Western (10,000)
AS (20)
AS 2053 (10)
Chapter 4

Actuarial Science 2053 Chapter Notes - Chapter 4: Compound Interest, Interest, Financial Institution


Department
Actuarial Science
Course Code
AS 2053
Professor
Steven Kopp
Chapter
4

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Chapter 4 – General and Other Annuities
General Annuities (section 4.1)
General annuities are annuities (either
ordinary or due) where the interest period
and the payment period are NOT the same
we will look at annuities where
payments are made more/less frequently
than interest is compounded
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Two Approaches for Determining Present or
Accumulated Values of General Annuities
1.
Calculate an Equivalent Interest Rate
determine an equivalent interest rate,
compounded with the same frequency
that payments are made
2.
Calculate an Equivalent Payment
determine an equivalent payment, made
with the same frequency that interest is
compounded
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Example 4.1.1
A person wishes to withdraw $1000 out of their
account every 3 months for 5 years, first
withdrawal 3 months from now. If the account
earns interest at j12 = 6%, how much is needed to
be in the account today?
Solution to 4.1.1
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