Calculate the single risk premium (to 2 decimal places) to be charged today on an insurance product that pays regular claims of $500 in 1,2,3,...,25 years from today. Use an interest rate of 4% per annum.
We are given with the following: A = 500 n = 25 i = 0.04
We solve for the single risk premium by this formula: P = A [(1 + i)^n - 1] / [ i (1 + i)^n] P = 500 [(1 + 0.04)^25 - 1] / [0.04 (1 + 0.04)^25] P = 78111.04
