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Cm1 September 2020 Q 10 i)

S

Salma

Member
Could someone please explain how the maturity benefit of 17,509.93 was calculated for September 2020 Q 10 i) ?

Thanks in advance!
 
I've worked out that it is

(0.1 *(15000 * 1.02^3)) + (15000 * 1.02^3)

I dont understand why it is using 1.02 ^3. I thought it would be 1.02 ^2, as bonuses are at the end of the year.
 
It's a 3-year policy, so someone who reaches maturity has survived to the end of 3 years and deserves 3 bonuses.

This would be the same whether the bonuses were paid at the start of each year or at the end of each year, as the policyholder was alive at the start/end of exactly 3 years.

In this (end-of-year) case imagine that the final bonus is awarded at the end of the third year immediately prior to the payment being made.
 
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