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#1




Calculating Actuarial Present Value for weird interest rate
I'm working a problem about a 25 year endowment insurance benefit with a 'bonus' attached to the insured value for each year survived. Assume lives follow SULT at 5%.
Insured amount is 250,000, bonus is 2.5%, compounded annually for each year survived. The APV of the term insurance portion is calculated as 250,000 * 1/1.025 * term insurance formula at interest rate 1.05/1.0251 = 2.439% I'm not sure how to find this amount on an exam. I can't imagine that I would be expected to actually run through the summation for 25 years. Is there a way to convert the life table to some other interest rate, that I don't know about? Last edited by LadyFingers; 07212019 at 03:01 PM.. 
#2




Does your source include a solution?
As I recall, a fair number of questions in the textbook assume readers have a spreadsheet with the mortality, so that they can do such calculations. That means that many of the textbook questions could not be used directly on the exam. 
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