Hi,
For part 1) of this question, can anyone tell me how this cost of increase in reserves at the end of year 1 - "-0.9920P" calculates? I know the reserve at the beginning of year 1 is zero.
And I have another question, why there isnt an interest earned on reserve component for us to take into account? As the example on page 22 has this component.
Many thanks.
Last edited by a moderator: Jan 14, 2008