Death for (x) is distributed such that the probability that an individual dies in the next 3 months is always the same regardless of their age. The probability that (x) will survive for 5 years is 35.8486%. What is the APV (the EPV) of the payout of a 1.5 year term life insurance policy on (x) if it pays $100,000 at the end of a quarter in which (x) dies? Use an annual interest rate of 9% compounded monthly (that's not a typo; I am giving you the monthly rate).
Death for (x) is distributed such that the probability that an individual dies in the next 3 months is always the same regardless of their age. The probability that (x) will survive for 5 years is 35.8486%. What is the APV (the EPV) of the payout of a 1.5 year term life insurance policy on (x) if it pays $100,000 at the end of a quarter in which (x) dies? Use an annual interest rate of 9% compounded monthly (that's not a typo; I am giving you the monthly rate).
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.3: Geometric Sequences
Problem 81E
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Transcribed Image Text:Problem #2: Death for (x) is distributed such that the probability that an individual dies in the next 3 months is always the
same regardless of their age. The probability that (x) will survive for 5 years is 35.8486%. What is the APV (the
EPV) of the payout of a 1.5 year term life insurance policy on (x) if it pays $100,000 at the end of a quarter in
which (x) dies? Use an annual interest rate of 9% compounded monthly (that's not a typo; I am giving you the
monthly rate).
Problem #2:
answer correct to the nearest dollar
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