Suppose that Happily Newly Wed Insurance Company is launching a new product for newly wed couples....

Transcribed Image Text:

Suppose that Happily Newly Wed Insurance Company is launching a new product for newly wed couples. If a married couple signs today, they are required to put a down payment of $20,000 today and should at least one of them survives 50 years from now, they receive $1,000,000 at the exact 50-year period. Their joint CDF is assumed to follow the following distribution, with T representing the husband's remainder lifetime, currently aged x, and T3 representing the wife's remainder lifetime, currently aged y: Fr₁73(t₁,t₂) = (100) 0.²5 × (105_) 0.²0 for 0 ≤t₁ ≤ 100 - x and 0 ≤ t₂ ≤ 105 - y c) If a newly wed couple, both aged 30, are evaluating their financial options and are debating whether to go for this insurance product or put $20,000 into a risk-free investment account that earns continuously compounded interest, 8. Find 8 such that the account grows to $150,000 in a 50-year period? Suppose that Happily Newly Wed Insurance Company is launching a new product for newly wed couples. If a married couple signs today, they are required to put a down payment of $20,000 today and should at least one of them survives 50 years from now, they receive $1,000,000 at the exact 50-year period. Their joint CDF is assumed to follow the following distribution, with T representing the husband's remainder lifetime, currently aged x, and T3 representing the wife's remainder lifetime, currently aged y: Fr₁73(t₁,t₂) = (100) 0.²5 × (105_) 0.²0 for 0 ≤t₁ ≤ 100 - x and 0 ≤ t₂ ≤ 105 - y c) If a newly wed couple, both aged 30, are evaluating their financial options and are debating whether to go for this insurance product or put $20,000 into a risk-free investment account that earns continuously compounded interest, 8. Find 8 such that the account grows to $150,000 in a 50-year period?

Answer rating: 100% (QA)

To find the interest rate 8 such that an initial investment of 20000 grows to 150... View the full answer