2007 #11

[elfueg07]

Despite how dead this forum is I thought I would throw this question out there:

Exam 2007, #11 part c: Both the SOA solution and the TIA walkthrough calculate investment income to arrive at the final economic profit amount. My question: is this step even necessary? As soon as you know the economic liability at time t=0 of 72.75, can you not just subtract that from the cash flow at time 0 of 75 and arrive at the economic profit of 2.25?

By definition isn't the economic profit in all future years zero? What is the point in going through the investment income calculations and writing out all the additional steps?