Question 4 A 1,000,000 2-year term life insurance with annual premiums of 9,700 is sold to [60]. The policy has underwriting cost of 1,000 and 25% of first premium commission. There are no renewal expenses. The effective rate of interest is 5% 25% of survivors at the end of the first year lapse coverage. Therefore, we are using a multiple state model. Given select mortality (with 1 year select period): q[60] = P[60] = 0.006; 961 = P61 02 = 0.008 Using a net reserve basis, which uses 115% of the mortality Enrolled (0) Lapse (1) above with a 3% interest reate, 1V = 1,295.90. Find the profit signature (note: the below table shows profit as positive) and the net presenet value (NPV) using a 15% hurdle rate. Death (2) Reserve Cost Reserve Year 1 V Premium Expenses Interest Benefits P[60] Emerging Profit (2,940.00) (2,940.00) O 9,700.00 (966.10) 1,295.90 9,700.00 0.00 Profit signature (6 pts): Net present value (4 pts): Please show your work above or below