1) Given the following information: Guaranteed Contract Premium Guaranteed Death
ID: 2700796 • Letter: 1
Question
1) Given the following information:
Guaranteed Contract Premium
Guaranteed Death Benefit
Projected Dividend
Projected Cash Value
Term Premium
Life_Premium Minus Term_Premium and Dividend
Cash_Flows
$2,300
$200,000
0
0
$325
???
???
$2,300
0
0
$330
???
???
$2,300
0
0
$335
???
???
$2,300
0
$3,500
$340
???
???
$2,300
$250
$6,000
$355
???
???
$2,300
$400
$9,000
$370
???
???
$2,300
$600
$12,000
$390
???
???
$2,300
$750
$15,000
$400
???
???
$2,300
$900
$18,000
$410
???
???
$2,300
$1,000
$24,000
$430
???
???
(a) Find the return (Internal Rate of Return) on the whole life insurance policy when the cost of term is included.
(Round your answer to the nearest 2 decimals, i.e. "3.56" " 4.11" or "12.93". Omit the "%" sign in your response)
(b) Which policy would you select if you can invest the difference between the term and whole life policies%u2019 premium at a 9 percent?
(Enter "Term" or "Whole Life" in the clock below.)
Guaranteed Contract Premium
Guaranteed Death Benefit
Projected Dividend
Projected Cash Value
Term Premium
Life_Premium Minus Term_Premium and Dividend
Cash_Flows
$2,300
$200,000
0
0
$325
???
???
$2,300
0
0
$330
???
???
$2,300
0
0
$335
???
???
$2,300
0
$3,500
$340
???
???
$2,300
$250
$6,000
$355
???
???
$2,300
$400
$9,000
$370
???
???
$2,300
$600
$12,000
$390
???
???
$2,300
$750
$15,000
$400
???
???
$2,300
$900
$18,000
$410
???
???
$2,300
$1,000
$24,000
$430
???
???
Explanation / Answer
a) 11.56% b)Term
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