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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).

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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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
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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