An insurer needs to make the following annuity payments to an individual: £2176 paid at the end of each year for the first 15 years and then £2177 paid at the end of each year for the following 12 years. Calculate the total amount of fund the insurer needs to hold today in order to meet these payments, given that the effective rate of interest is: 5.8% pa for the first 7 years and then 6.2% pa thereafter. Express your answer in £s to 2 decimal places. (correct answer = 28787.58)
An insurer needs to make the following annuity payments to an individual: £2176 paid at the end of each year for the first 15 years and then £2177 paid at the end of each year for the following 12 years. Calculate the total amount of fund the insurer needs to hold today in order to meet these payments, given that the effective rate of interest is: 5.8% pa for the first 7 years and then 6.2% pa thereafter. Express your answer in £s to 2 decimal places. (correct answer = 28787.58)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An insurer needs to make the following annuity payments to an individual:
£2176 paid at the end of each year for the first 15 years and then
£2177 paid at the end of each year for the following 12 years.
Calculate the total amount of fund the insurer needs to hold today in order to meet these payments, given that the effective rate of interest is:
5.8% pa for the first 7 years and then
6.2% pa thereafter.
Express your answer in £s to 2 decimal places. (correct answer = 28787.58)
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