SEVERAL EXAMPLES ON ANNUITY

1. [2010 paper question 6] The deterministic force of interest at time t is

given by

0.01 t 5
(t) =
.
0.03 t > 5
Find the present value of a 10 year continuous annuity that pays 1 per
annum during the first 3 years and 2 per annum during the last 7 years.
Calculate also its accumulated value after 10 years.
2. [2012 paper question 3] The force of interest at time t is given by
1
.
(t) =
10 + t
An increasing annuity pays an amount of 11 at the end of the year 1, 12
at the end of year 2 and so on till final payment which is 20 at the end
of year 10. Calculate the present value of the annuity at time 0 and the
accumulation of the annuity at time 10.
3. [2007 paper question 2] The force of interest is given by

0.08 0 t < 1
.
(t) =
1
1t<3
1+t
(a) Find the present value for a 3-year increasing annuity paid continuously with a stream of payments as follows:

1 0t<1
2 1t<2 .
(t) =

3 2t<3
(b) Find the accumulated value after 3 years of the annuity described
in the previous part.