CT1 DMT of deferred

[Gourav Didwania]

What is the DMT of deffered annuity

 

[John Lee]

Depends on the period of deferment, the size of the payments, the length of the annuity and the interest rate.
Always helpful to give a specific example.
Suppose - we have annual payments of 5 starting at time 11 and finishing at time 20.

\(DMT = \dfrac {5*11v^{11} +5*12v^{12} + \dots + 5*20v^{20}}{5v^{11} +5v^{12} + \dots + 5v^{20}}\)

 

[Gourav Didwania]

Depends on the period of deferment, the size of the payments, the length of the annuity and the interest rate.
Always helpful to give a specific example.
Suppose - we have annual payments of 5 starting at time 11 and finishing at time 20.

\(DMT = \dfrac {5*11v^{11} +5*12v^{12} + \dots + 5*20v^{20}}{5v^{11} +5v^{12} + \dots + 5v^{20}}\)

So now for the numerator we have to solve each term separately? It will consume a good amount of time if the term of annuity is large!

 

[John Lee]

No, you could rewrite it a number of ways. For example \(5((Ia)_{20} - (Ia)_{10})\).