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Lesson 3: FM Review Fall 2013

The document discusses different types of continuous annuities including those with payments that vary in arithmetic or geometric progression. It provides formulas for calculating annuities when payments increase or decrease at a fixed amount or ratio over time. Specifically, it presents the key formula to memorize for a perpetuity with payments varying in geometric progression.

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Harrison Richards
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51 views2 pages

Lesson 3: FM Review Fall 2013

The document discusses different types of continuous annuities including those with payments that vary in arithmetic or geometric progression. It provides formulas for calculating annuities when payments increase or decrease at a fixed amount or ratio over time. Specifically, it presents the key formula to memorize for a perpetuity with payments varying in geometric progression.

Uploaded by

Harrison Richards
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FM Review Fall 2013

Lesson 3
Continuous Annuity

Payment varying in arithmetic progression Payments are increasing or decreasing at a fixed amount. ( )

P = amount of first payment (at time 1) Q = amount of increase or decrease in the payments

More formulas: *Can be used only when .

*Can be used only when

&

FM Review Fall 2013

For perpetuity (at time 1):

Payment varying in geometric progression Payments are increasing or decreasing at a fixed ratio.

*This is the only formula you have to memorize in this part.

Continuous Varying Annuities Payments are increasing or decreasing continuously at a fixed amount. ( ) *Not popular in FM

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