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CM1B_April_2024_Answer_Booklet
CM1B_April_2024_Answer_Booklet
CM1B_April_2024_Answer_Booklet
Y/E cashflow
- 1,000,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
- 125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
125,000
-
-
-
Project A Project B
(i) IRR
(ii) NPV
(iii) DPP
(iv)
mux 0.03
(ii)
(iii)
Loan
Interest payable by policyholder on the loan 5.5% p.a. effective
Term Assurance
Interest rate for pricing the decreasing term assurance 3.5% p.a. effective
Expenses None
Surrenders None
The company sets the level annual premium for the decreasing term assurance by equating the expected
present value of premiums and the expected present value of benefits.