Mrs Angel wants to help her 18 years old grandson Bill buy a house a few years after he graduates from the University. She therefore pays $40,000 for a pure endowment which will pay a benet to Bill on his survival to age 24. Assume the effective interest rate is 2% p.a. (10 marks): (i) How much will this survival benet be? (5 marks)

(ii) Find the difference of the endowment amount compared to the accumulated value of the money in a savings account at r = 2%. (5 marks)

(b) Mrs Angel wants to help her 18 years old grandson Bill buy a house a few years after he graduates from the University. She therefore pays $40,000 for a pure endowment which will pay a benefit to Bill on his survival to age 24. Assume the effective interest rate is 2% p.a. (10 marks): (i) How much will this survival benefit be? (5 marks) (ii) Find the difference of the endowment amount compared to the accumulated value of the money in a savings account at r = 2%