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table [ [ Q 4 , ] , [ EPV of Payment to Mrs Lin,$ 1 , 4 6 7 , 7 7 1
tableQEPV of Payment to Mrs Lin,$
It occurs to Mrs Lin that, instead of "selffunding" her retirement, she could buy a
life annuity from an insurer. Consider such a life annuity, paying exactly what Mrs
Lin wants at the end of the first year, then more each year thereafter
For now, let's assume that an insurer charges exactly the EPV of the benefits,
under a pa interest rate so the price of this annuity would correspond
exactly to the amount you computed in Qattached image Because this EPV is less than if
Mrs Lin buys this annuity, she will have some spare cash. Assume she uses all this
cash to buy a "Whole of Life" insurance policy. This policy will pay a benefit to
Josephine, at the end of the year in which Mrs Lin passes. Again, let's assume the
premium to be paid now for this Whole of Life insurance policy is the EPV of the
benefit still using a rate of pa
What is Please place your answer in cell Bas an Excel calculation and
explain your calculations in your report.
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