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| rev | Admin | (Created page with "'''Solution: B''' The fund will have <math display = "block">500(1.05)^{4}-100s_{\overline{4}|0.05}=176.74 </math> after four years. After returning 75% to the insured, the insurer receives 0.25(176.74) = 44.19. So the insurer’s cash flows are to pay 100 at time 0, receive 125 at time 2, and receive 44.19 at time four. The equation of value and the solution are: <math display = "block"> \begin{align*} 100(1+i)^{4}-125(1+i)^{2}-44.19=0 \\ (1+i)^{2}=\frac{125\pm\sqrt{(...") | Nov 20'23 at 12:33 | +589 |