Verified solution · Exam FM
This Exam FM sample reference tests Terminal Value with Separately Reinvested Interest. Five beginning-year deposits preserve 5000 of principal. Their annual 5% interest forms installments 50, 100, 150, 200, and 250; reinvested at 4%, these total 791.22 at year 5. The combined value is 5791.22, choice E.
Independent solution
Setup
Because interest is available for separate reinvestment, the original fund retains only deposited principal.
Model
At year t, the t active deposits produce 50t of interest.
Compute
Evaluate the side account and combine it with principal.
Answer
The accumulated value rounds to 5791, choice E.
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Error diagnosis
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Original practice · fully worked
Four deposits of 500 are made at the beginning of successive years. Each earns 6%, with annual interest withdrawn and reinvested in a side account. The combined value at the end of year 4 is 2,309.13581. Determine the side account's annual effective rate.
Principal remains 2000, leaving 309.13581 in the side account. The increasing annual interest stream reaches that value at a 3% side-account rate, choice C.
Setup
Each active deposit produces annual interest of 30.
Model
Remove principal from the target to obtain the side-account target.
Compute
Solve the dated interest-stream equation.
Answer
The side account earns 3%, choice C.
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ActuaryProof. “SOA Exam FM Sample Question #363 — Verified Solution.” Verified 2026-07-31.
Source reference: official SOA sample-question PDF. Last reviewed 2026-07-31.
