thanks, so by definition the start of each policy year is the same as time t? say the start of policy year 1 is it the same as time 1 on a timeline?
For the rate b1 there is no initial lag rate for the rate b2 there is a lag rate of a year so instead of 6 years it is 5. Because they say "Excluding the simple bonus related to that year".
the first simple bonus will be compounded for four years second will be compounded for 3 years and last will be compounded for zero years 3750*1.05^4 + 3750*1.05^3 + 3750*1.05^2 + 3750*1.05^1 + 3750*1.05^0 = 20721.11 this 20711 has two parts = 3750*5 (those five simple bonuses) + 1971.11 (super compound bonus)