Hi all, I am looking for a recursive formula for the calculation of a geometric increasing (annually) whole life annuity payable monthly. Thus the payments for the first 12 months are 1, the payments for the next 12 months are (1+e), and so on. I wasn't able to derive/find it. Does this one exists at all? Thanks.
From memory, I believe you do it by adjusting the interest rates. e.g. if the annuity grows by 4% and interest is 4%, then they cancel each other out. I think the questions/examples use rates like 2% & 6.08% so you end up with 4%.
