Page 122, problem 11 and Page 126, solution to problem 11.
According to the solutions section, page 126, the answer for problem 11 is E.
According to the problem, the company would have paid the policy holder a total of 10 payments by the end of the 9th year, because the first payment is on year = 0.
This means that the 10 annual payments would accumulate as:
Y[(1+i)9 + (i+1)8 + ... + (i+1) + 1]
Y = 8,648.27
However, in the solutions section, the authors only counted 9 annual payments starting at year = 0. They used:
Y[(1+i)9 + (i+1)8 + ... + (i+1)]
In the problem, it clearly states that the first payment is immediate, which is at time = 0. Thus, at the end of 9 years, there must be a total of 10 payments.
In other words, on page 126, shouldn't the s(dot)(dot)9|.05 be s10|.05?
According to the solutions section, page 126, the answer for problem 11 is E.
According to the problem, the company would have paid the policy holder a total of 10 payments by the end of the 9th year, because the first payment is on year = 0.
This means that the 10 annual payments would accumulate as:
Y[(1+i)9 + (i+1)8 + ... + (i+1) + 1]
Y = 8,648.27
However, in the solutions section, the authors only counted 9 annual payments starting at year = 0. They used:
Y[(1+i)9 + (i+1)8 + ... + (i+1)]
In the problem, it clearly states that the first payment is immediate, which is at time = 0. Thus, at the end of 9 years, there must be a total of 10 payments.
In other words, on page 126, shouldn't the s(dot)(dot)9|.05 be s10|.05?
ASM 11th edition, page 122, problem 11
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