CT1 DMT of deferred

Discussion in 'CT1' started by Gourav Didwania, Sep 19, 2017.

  1. What is the DMT of deffered annuity
     
  2. John Lee

    John Lee ActEd Tutor Staff Member

    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 likes this.
  3. 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!
     
  4. John Lee

    John Lee ActEd Tutor Staff Member

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

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