Answer to Question #281470 in Statistics and Probability for Ashley Bonete

Question

A.Find the period of deferral in each of the following deferred annuity problem (one

way to finnd the period of deferral is to count the number of artificial payments)

1.Monthly payments of P2,000 for 5 years that will start 7 months from now

2. Annual payments of P8,000 for 12 years that will start 5 years from now

3. Quarterly payments of P 5,000 for 8 years that will start two years from now.

4.Semi-annual payments of P60,000 for 3 years that will start 5 years from now

5.Payments of P3,000 every 2 years for 10 years starting at the end of 6 years

Answer 1

Solution:

1:

Payment period = 1 month

Payments will start = 7 months

Deferral payment = Payments will start - 1 period

= 7 months - 1 month

= 6 months (Periods)

Deferral period is 6 months

2:

Payment period = 1 year

Payments will start = 5 years

Deferral payment = Payments will start - 1 period

= 5 years - 1 year

= 4 years (Periods)

Deferral period is 4 years

3:

Payment period = 1 Quarter

Payments will start = 2 years = 8 Quarters

Deferral payment = Payments will start - 1 period

= 8 Quarters - 1 Quarter

= 7 Quarters (Periods)

Deferral period is 7 Quarters

4:

Payment period = 1 semi annual year

Payments will start = 5 years = 10 Semi annual years

Deferral payment = Payments will start - 1 period

= 10 semi annual years - 1 semi annual year

= 9 Semi annual years (Periods)

Deferral period is 9 Semi annual years

5:

Payment period = 2 year

Payments will start = 6 years = 3 periods

Deferral payment = Payments will start - 1 period

= 3 two year periods - 1 two year period

= 2 two year periods

Deferral period is 2 two year periods