An insurance company considers the present value of a 10-year term life insurance policy to be...

An insurance company considers the present value of a 10-year term life insurance policy to be $3,738. The premiums that the company collects are $55 at the beginning of every month for the 10 years. What monthly compounded nominal rate is implied in the calculation of the policy's value?

A lottery prize of $2,250,000 per year, payable at the beginning of every year for 20 years can also be collected as a single lump sum payment of $23,500,000. What effective annual rate was used in the calculation of this value?

CorBloc Ltd. is setting up a fund to pay back a $22,000,000 debt in 18 years. To accumulate this money they will make equal annual deposits at the beginning of each year into a fund earning 9% compounded quarterly. What will be the size of the annual deposits?

Expert Solution

ekkarill92 answered 2 years ago

Prudent policy life insurance co. offers a 10 year term life insurance policy with a $250000...

Prudent policy life insurance co. offers a 10 year term life insurance policy with a $250000 benefit and annual premiums of $200, paid at the beginning of each year. If prudent can earn 8% on invested capital, what is the present value to the firm of the premiums from one policy, assuming the policy holder outlives the policy term?

An insurance company will pay the face value of a term life insurance policy if the...

An insurance company will pay the face value of a term life insurance policy if the insured person dies during the term of the policy. For how much should an insurance company sell a 10-year term policy with a face value of $40,000 to a 30-year-old man for the company to make a profit? The probability of a 30-year-old man living to age 40 is 0.97. Explain your answer. Remember that the customer pays for the insurance before the policy...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a 20-year-old female for $200. The probability that the female survives the year is 0.999634. compare and interpret the expected value of this policy to the insurance company. the expected value is $___ (round to two decimal places as needed)

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year...

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year old female for $150. The probability that the female survives the year is .999724. Find the expected value for the insurance company.

suppose a life insurance company sells a $240,000 one year term life insurance policy to a...

suppose a life insurance company sells a $240,000 one year term life insurance policy to a 19 year old female for $270. the probability that the female survives the year is .999522. compute and interpret the expected value if this policy to the insurance company. the expected value is $______

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old...

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old male for $350. The probability this person survives the year is 0.98734. Compute the expected value of this policy to the insurance company to the nearest 0.01.

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old...

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old female for $190. The probability that the female survives the year is 0.999594. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old...

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old female for $280. The probability that the female survives the year is 0.9996420 Compute and interpret the expected value of this policy to the insurance company. The expected value is $nothing. (Round to two decimal places as needed.)

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old female for $200. The probability that the female survives the year is .999461. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old female for $330. The probability that the female survives the year is 0.999502. Compute and interpret the expected value of this policy to the insurance company.

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