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214 14: Additional Examples
File name : English-M02-1-040308(Print).doc Print data : 2004/3/9
Example: Insurance Policy. You are evaluating your $50,000
insurance policy. The premium of $1,010 is due at the beginning of the
year, and a dividend of $165 is received at the end of the policy year.
The cash value of the policy is $3,302 at the beginning of the year; it
will grow to $4,104 by the end of the year. You can earn 6% on a
savings account. What is the annual price per $1,000 protection?
Select the correct equation in the Solver.
Keys: Display: Description:
Creates menu.
1010
Stores annual premium.
3302
Stores value of policy at
end of last year.
6
Stores interest rate you
could get elsewhere.
4104
Stores value of policy at
end of this year.
165
Stores annual dividend.
50000
Stores face value of
policy.
Your protection cost
$6.57 per $1,000 face
(protection) value.
Insurance protection could be purchased for $3 per $1,000 face value.
Calculate the rate of return on your savings.
Keys: Display: Description:
3
Stores price of alternate
insurance.
Calculates rate of return.