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:
1010
3302
6
4104
165
50000
Insurance protection could be purchased for $3 per $1,000 face value.
Calculate the rate of return on your savings.
Keys:
3
214 14: Additional Examples
Display:
Display:
Description:
Creates menu.
Stores annual premium.
Stores value of policy at
end of last year.
Stores interest rate you
could get elsewhere.
Stores value of policy at
end of this year.
Stores annual dividend.
Stores face value of
policy.
Your protection cost
$6.57 per $1,000 face
(protection) value.
Description:
Stores price of alternate
insurance.
Calculates rate of return.