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  3. Life Insurance Products Valuation in R

Exercise

Deposits of the saving plan

Now that you have defined the variables discount_factors, deposits and payments, you are ready to determine the value \(K\) of the yearly savings deposits using the actuarial equivalence relationship between the deposits (red cash flow) and the payments (blue cash flow).

Instructions

100 XP
  • Calculate the present value of the deposit pattern as the sum() of the elementwise product of deposits and discount_factors.
  • Do the same for the payment pattern by summing over the product of payments and discount_factors.
  • Using the concept of actuarial equivalence, the yearly deposit K in the first four years can be calculated by dividing PV_payment by PV_deposit.