2019 Fall Q14 b)

kkw1089kkw1089
in CIA.PrLiabs

Hi Graham,

In Sample answer 2 in part b of Q14 from the examiner's report, it says

Net APV = 98366 + 6886 + 588 + 188 = 106,028, while 98366 comes from Net PV @ 3.5%.

Why are they using the discount rate of 3.5% in the Net PV component? Shouldn't they use Net PV @ 2.75% (or 98954) to account for MfAD(inv) in accordance with the formula in the wiki?

Thank you,

Comments

  • kkw1089kkw1089

    Oh never mind, they calculated the interest rate PfAD separately. It's mathematically equivalent.

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