Refer to 20-25, original data. Fred Morton has just purchased a life insurance policy from Porter with premiums equal to $1,500 per year.

Required:

1. Assume Fred holds the policy for one year and then drops it. Wlrat is his contribution to Porter's operating income?

2. Assuming Fred holds the policy for three years, what is his contribution to Porter's op¬

erating income in the second and third years? Over a three year period? What impli¬

cations does this hold for Porter's efforts to retain policyholders?