Calculating investment return on accounts question

[tjcchan]

Hi Coralie

I've come across 2 accounts questions in which you are asked to calculate an investment return for the year in the absence of (Q5 Sep 2008, Q5 April 2006)

2006 solution used

(UPR b/f + O/s Claims reserve b/f - DAC b/f)* investment return

2008 solution used

(UPR b/f + O/s claims reserves b/f + 1/2 * cashflow during the year) * investment return

where cashflow is defined as NWP - paid expenses - paid claims

are they both correct? doesn't it matter which one I choose to use?

why aren't the c/f figures being used instead in the first solution?

 

[MrMikeR]

I understand the examiners will give credit for any valid method, and as they have used both methods, then they are both valid.

I would go for whatever seems most appropriate in the question.