Worked solution · Exam FM
This Exam FM sample reference tests Annuities and Perpetuities. The five deposits supply 1,000 of principal; accumulating their separately transferred interest at 6% gives an additional factor 16.2553 times 200i, and the target 1,260 implies i = 8%, choice A.
Independent solution
Setup
Keep deposited principal separate from the annual interest transferred for reinvestment.
Model
At year k, interest is based on k deposits and then grows at 6% for the remaining years.
Compute
The accumulated transfer factor is 16.2553, making the source interest rate 8%.
Answer
The deposits earn 8.00% before transfer, corresponding to choice A.
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30 original Exam FM questions across the syllabus, to be worked in 150 timed minutes, with a full worked solution for each one. Written for Exam FM, not copied from the SOA set. One-time $39 PDF.
Original practice · fully worked
A museum deposits 200 at the beginning of each of six years. Principal earns 9% simple interest each year, with every year's interest transferred to an account earning 7% annually. Find the combined value at the end of year 6.
The six deposits provide 1,200 principal and the accumulated interest transfers provide 425.32, totaling 1,625.32, choice C.
Setup
Track fixed principal and transferred interest in separate accounts.
Model
At year k, source principal is 200k and its 9% interest grows at 7% until year six.
Compute
The transfers accumulate to 425.3197 in addition to 1,200 principal.
Answer
The combined terminal value is 1,625.32, corresponding to choice C.
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These references share syllabus concepts or sit nearby in the official sequence. All 113 Exam FM annuities and non-contingent cash flows practice problems.
Drill the method: Exam FM Annuities and Perpetuities problems
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