Answer:
x = 12.29
Step-by-step explanation:
present value of the claim = x² / (1 + 2%)¹⁵ = 0.743x²
present value of the 10 premiums:
x + x/1.02 + x/1.02² + x/1.02³ + x/1.02⁴ + x/1.02⁵ + x/1.02⁶ + x/1.02⁷ + x/1.02⁸ + x/1.02⁹ = x + 0.9504x + 0.9612x + 0.9423x + 0.9238x + 0.9057x + 0.888x + 0.8706x + 0.8535x + 0.8368x = 9.1323x
0.743x² = 9.1323x
x² / x = 9.1323 / 0.743
x = 12.29
Answer
x = 12.29
Step-by-step explanation:
Given that the policy claims x² in 15 years, at 2% = 0.02, the present value of the claim is given as:
x²/(1 + 0.02)^15
= x²(1/1.02)^15
= 0.743x²
The present value of the 10 premiums:
x + x/1.02 + x/1.02² + x/1.02^3 + x/1.02^4 + x/1.02^5 + x/1.02^6 + x/1.02^7 + x/1.02^8 + x/1.02^9
= x + 0.9504x + 0.9612x + 0.9423x + 0.9238x + 0.9057x + 0.888x + 0.8706x + 0.8535x + 0.8368x
= 9.1323x
Now,
0.743x² = 9.1323x
x²/x = 9.1323/0.743
x = 12.29
This is what we are looking for.
