SUMMARY
The discussion centers on the calculation of future investment value using actuarial mathematics, specifically the formula A(t) = at² + b. An investment of $100 at time 0 accumulates to $172 at time 3, leading to the determination of constants a and b. The value of a is established as 0.08, resulting in the formula A(t) = 0.08t² + 1. The accumulated value at time 10 for an investment made at time 5 is calculated to be $600, although there is confusion regarding the correct interpretation of the variables used in the equations.
PREREQUISITES
- Understanding of actuarial mathematics and investment calculations
- Familiarity with quadratic equations and their applications
- Knowledge of time value of money concepts
- Basic proficiency in algebraic manipulation
NEXT STEPS
- Study the derivation and application of the quadratic formula in financial contexts
- Learn about the time value of money and its impact on investment growth
- Explore actuarial models for predicting future cash flows
- Investigate the use of financial calculators for complex investment scenarios
USEFUL FOR
Finance students, actuaries, investment analysts, and anyone involved in calculating future investment values using mathematical models.