So I'm doing both TIA and the ACTEX book, I'm working on the 2015 SOA P manual and I'm doing problem number 16.
It says smith makes 100k a year and is expected to increase by .05 per year until he retires. If he works for 35 years how much did he make over his lifetime.
So I know for year 35 we're going to have it as:
100,000 * [1+.05+...+.05^34]
So I thought this was a progression so I did it as:
100,000 ( (1-.05^35)/1-.05) which gave me 105,263. So I knew this was wrong so I looked into the answer and I don't understand how they came to their answer.
Could someone explain this to me? I'm new, I don't know anything so any help would be appreciated.
It says smith makes 100k a year and is expected to increase by .05 per year until he retires. If he works for 35 years how much did he make over his lifetime.
So I know for year 35 we're going to have it as:
100,000 * [1+.05+...+.05^34]
So I thought this was a progression so I did it as:
100,000 ( (1-.05^35)/1-.05) which gave me 105,263. So I knew this was wrong so I looked into the answer and I don't understand how they came to their answer.
Could someone explain this to me? I'm new, I don't know anything so any help would be appreciated.
P exam Chapter 0 Question from ACTEX manual