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You are the product actuary for company A+ Life. You have developed a five-year decreasing annuity that pays 1,000 per unit at the end of first year, 500 at the end of the second year, 3331 at the end of the third year, 250 at the end of the fourth year, and 200 at the end of the fi year. Calculate the Macaulay duration for this annuity given an annual effective interest rate of 5%. A B с $2.5 > 2.5 and <3.0 > 3.0 and <3.5

You are the product actuary for company A+ Life. You have developed a five-year decreasing annuity that pays 1,000 per unit at the end of first year, 500 at the end of the second year, 3331 at the end of the third year, 250 at the end of the fourth year, and 200 at the end of the fi year. Calculate the Macaulay duration for this annuity given an annual effective interest rate of 5%. A B с $2.5 > 2.5 and <3.0 > 3.0 and <3.5

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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You are the product actuary for company A+ Life. You have developed a five-year decreasing annuity that pays 1,000 per unit at the end of the first year, 500 at the end of the second year, 333 at the end of the third year, 250 at the end of the fourth year, and 200 at the end of the fifth year. Calculate the Macaulay duration for this annuity given an annual effective interest rate of 5%. A B 0 с D E $2.5 > 2.5 and <3.0 > 3.0 and 3.5 >3.5 and 4.0 > 4.0
Transcribed Image Text:You are the product actuary for company A+ Life. You have developed a five-year decreasing annuity that pays 1,000 per unit at the end of the first year, 500 at the end of the second year, 333 at the end of the third year, 250 at the end of the fourth year, and 200 at the end of the fifth year. Calculate the Macaulay duration for this annuity given an annual effective interest rate of 5%. A B 0 с D E $2.5 > 2.5 and <3.0 > 3.0 and 3.5 >3.5 and 4.0 > 4.0
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