Catherine has two dogs, Coco and Milo. Catherine bought Coco 3 years ago when Coco was...
Catherine has two dogs, Coco and Milo. Catherine bought Coco 3 years ago when Coco was 1
year old, and has just bought 2-year-old Milo today. The future lifetimes of both dogs are independent. The standard mortality for dogs is as follows:
x 1 2 3 4 5
qx 0.2 0.1 0.2 0.3 0.4
Dogs under Catherines possession have higher than standard mortality, according to the following:
• 125% of standard mortality in year 1.
• 110% of standard mortality in years 2 and 3.
• 105% of standard mortality in years 4 and later.
Catherine plans to set up a fund today to provide 1, 220 to replace one dog at the end of 2 years if at least one dies. The amount of the fund will be the actuarial present value of 1000. Catherine uses a discount factor of v = 0.99.
Calculate the initial value of the fund.
Homework Answers
Next time try providing complete question from correct source.
The statement actuarial pv relates to no part the prob for year 6
not mentioned.
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