Question

In: Finance

Today is January 1 2020, Jackson will use a single premium to purchase an annuity today....

Today is January 1 2020, Jackson will use a single premium to purchase an annuity today. This annuity pays 10,000 at the end of each year while Jackson is alive. The estimated probability of Jackson surviving for the next 4 years is stated in following table. The yield rate is assumed to be j1 = 4.74% p.a. Calculate premium value. Round your answers to three decimal places.

Year
1 0.80
2 0.68
3 0.46
4 0



Select one:

a. 17683.841

b. 14774.533

c. 17839.739

d. 19400.000

Solutions

Expert Solution

Expected present value of Premium = Expected present value of Benefits

Let, Premium be P

P = 14774.53349

(Rounded to three decimal places)

P = 14774.533

Answer: Option B

jeff jeffy answered 2 years ago
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