Hi
In the revision books, the answer for this question says that it is assumed that the non-unit reserves do not increase with interest. Firstly, what would be the reason for this?
Secondly, why do the cashflow projections under column 5 start with an amount of 500. If the non-unit reserves don't accrue interest, should this not be 200? I can't figure out where the initial value is coming from.
In the revision books, the answer for this question says that it is assumed that the non-unit reserves do not increase with interest. Firstly, what would be the reason for this?
Secondly, why do the cashflow projections under column 5 start with an amount of 500. If the non-unit reserves don't accrue interest, should this not be 200? I can't figure out where the initial value is coming from.