Actuarial Science 2053 Chapter Notes - Chapter 4: Sug
20 Jan 2016
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Not all annuities have a level series of payments; instead we are going to look at annuities where the payments change every period. A man, age 35, is injured in a car accident and is no longer able to work. He sues for damages and is awarded a lump sum of money equivalent to his future lost income. He is currently earning ,000 a year, has 30 years until retirement and is expected to get a raise of 3% per year. If j1 = 6%, what would be the lump sum award? (assume wages are paid in one lump sum at the end of the year). You deposit every 3 months beginning today. You plan to increase your deposit by 1% every quarter. Solution to 4. 4. 2 (iii) payments vary in terms of a constant. Example: annuity consisting of payments that start at and increase by every period.
