JoJo Klum purchases a life insurance policy from BetterLifeCo. JoJo will pay a premium of $125 every week on Friday, and in return their beneficiaries will receive a payment of $1,000,000 on the second Friday after JoJo dies. BetterLifeCo invests the premiums it receives and expects to earn interest (net of any costs) of j 52 = 10.4% p.a.

a) Illustrate all the cash flows associated with this scenario as a fully labelled timeline diagram. (Include JoJos death as an event of the timeline.) [3 marks]

b) If JoJo lives another 25 years, determine the amount that BetterLifeCo will have accumulated from JoJos premiums, at the time of JoJos death. [1 mark]

c) Determine how much this will accumulate to by the time that BetterLifeCo need to make the payout. [2 marks]

d) Thus, explain whether under this scenario insuring JoJo would have been a profitable exercise for BetterLifeCo. [1 marks]

e) Determine the minimum time JoJo would have needed to live in order for BetterLifeCo to break even on the policy. [NB this question is a little more difficult and intended to provide a bit of stretch for stronger students because you need to take into account the two-week delay to payout after JoJos death.] [4 marks]