Reply To: [ILA Track] Intro to ILA Module Exercise Task 3: Actuarial Pricing Memo

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#1588
nicktheactuary
Participant

Yeah the example in section 11.6.2.3 is the one I used to base my answer off of. I did not use the IRR function. Instead I used used formula 11.5.3 and used 10% when discounting negative cashflows and then used goal seek to determine the ROI such that the PV at 0 was 0.

For the EV, I also used 11.5.3 directly just as the textbook did it. I see where you got your 16.10. I did the calculation 1 more time. You stopped in column C when I applied the formula one more time to get to 14.64 to get to time 0. Since I applied the formula one more time than you, then I would be assumed DE occur at end of year. Based on example, 11.6.4 I feel like my way may be correct.

One last question about NB strain, since DE in year 1 is negative, you get a negative percentage (-57.9%). Did you leave it as negative or take the absolute value?