Lab 2

# Lab 2 - Math/Stat 170 Lab Project 2 Purdue Life Profits...

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Math/Stat 170 Lab Project 2 Purdue Life Profits Part 1: Purdue Life sells 100, 30 year term insurance policies , each with a death benefit of \$10,000 and each with an annual premium of \$100/year, payable on January 1. We will initially assume that every December 31, one of our original 100 policy holders dies. The remaining policy holders renew for another year, paying another \$100 premium. We will also initially assume that we invest all premiums at an interest rate of 10% per year. In the first part of this project, you will set up an Excel spreadsheet to compute a year-by-year record of Purdue Life's profit under the above scenario. Part 2: In the second part of the project you will study the effect of changes in the interest rate and the mortality experience of the insurance policies on Purdue Life's profit. Specifically, you will use the interest rate indicated in the “rate” column next to your name on page 5 of this handout instead of the 10% rate from Part 1. You will also assume that for the period of time listed under the “Period” column next to your name on page 5, 2 people die on Dec. 31 instead of 1. (This is 1, 2, 3, 4, or 5 years) In every other year, from year 1 to year 30, 1 person dies. You assume that the period of 2 deaths begins with the year listed in the columns labeled “Year Begins” next to your name on Page 5. (For example if you have a Period of 3 and a Year Begins of 12, you would have 2 deaths in years 12, 13, and 14 and 1

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## This note was uploaded on 04/25/2011 for the course MA 170 taught by Professor Staff during the Spring '08 term at Purdue.

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Lab 2 - Math/Stat 170 Lab Project 2 Purdue Life Profits...

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