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QnA Bank - Q3.41)

B

bpatel28

Member
Can anyone explain the last line in the solution bank for Q3.41 ?

I don't quite understand the subtraction of the last term (13/24 * 25,000)

I evaluated the EPV as 20000a65(f) + 150000a60(m) - 10000a60/65 (joint life) all in arrears, which gives me the correct answer rounded to the nearest £10, differences are probably due to rounding in my annuity figures.

But i'd like to understand the alternative approach of using annuity dues and then taking off this term ?
 
they subtracted (13/24*25000) since they said payment has to be on monthly arrears basis, so for that they subtracted 13/24*25000

(m - 1)/2*m + (1/m) = (12-1)/2*12 + (1/12) = 13/24
 
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