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CA2 Course Notes Query

A

ActStudent1405

Member
The solution to the worked example in Section 10 of the 2015 Course Notes (pg 104) corrects a mistake in the annuity factors at 4% by taking the "average values".

I am not sure if I interpreted the Course Notes correctly, but I obtained the value of 15.85 through linear interpolation:

LHS (Annuity Factor 3%): (19.0 - 17.4)/(19.0 - 15.8) = (17.3 - x)/(17.3 - 14.4). Solve for x to get x = 15.85.

RHS (Annuity Factor 5%): (15.6 - 14.3)/(15.6 - 13.0) = (17.3 - x)/(17.3 - 14.4). Solve for x to get x = 15.85.

Is this the correct approach or the Course Notes or are using a different method?

Thanks
 
Hello,

I would appreciate if someone could provide a clarification to my earlier query.

Thanks.
 
Hi,
I didn't study CA2 yet, but I know about annuity factors well.
If you upload a image of part, I may get it correct to you.
 
ActStudent1405 said:
Hello,

I would appreciate if someone could provide a clarification to my earlier query.

Thanks.
Click to expand...

Hi. I think that what you've found there is a happy coincidence rather than a general principle. If the data in the table possessed a "twist", then the results may well diverge. It's the manner in which the original data was generated that allows for these identical results to be achieved via difference means.
 
Thank you Steve. I had a fresh look at this section of the Course Notes. There is a simpler way by taking the average of the annuity factors at 3%, 4% and 5% between the two ages: 60 and 70. The same pattern is noted for all three percentages and I guess, this is the assumption taken in the Course Notes. Happy to hear any other suggestions.
 
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