Uploaded by Marianne Naelga

PREMIUM OR DISCOUNT EQUATION

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ep
r
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du
r
ei
ns
o
l
v
i
n
gb
o
n
dp
r
e
mi
u
man
db
o
n
ddi
s
c
o
u
n
to
na
b
o
n
dr
e
de
e
mab
l
eo
rb
o
u
g
h
tatp
ar
,b
o
u
g
h
tatap
r
e
mi
u
m,o
rb
o
u
g
h
tatadi
s
c
o
u
n
t
,b
yde
t
e
r
mi
n
i
n
gf
i
r
s
t
t
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u
r
c
h
as
ep
r
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z
e
.
T
h
ef
o
l
l
o
wi
n
gf
o
r
mu
l
aswi
l
lb
eu
s
e
di
nt
h
i
ss
e
c
t
i
o
n
.
Bo
n
dp
r
e
mi
u
m(
Pb)
( )
)
(
1
1
+i
Pb=Rv(
b–i
)
i
Bo
n
ddi
sc
o
u
n
t(
Db)
( )
)
(
1
+i
1
Db=Rv(
i–b
)
i
Pu
r
c
h
asep
r
i
c
e
Bo
u
g
h
tatap
r
e
mi
u
m
p=Rv+Pb
Bo
u
g
h
tatadi
sc
o
u
n
t
p=Rv–Db
I
l
l
u
s
t
r
at
i
v
eEx
amp
l
e
s
:
Ex
amp
l
e1
:
Fi
n
dt
h
ep
u
r
c
h
as
ep
r
i
c
ean
ddi
s
c
o
u
n
to
fa1
6%,m=4,P50,
000b
o
n
dmat
u
r
i
n
gi
n1
5%t
oy
i
e
l
d
t
h
eb
u
y
e
r1
6.
5%c
o
mp
o
u
n
dqu
ar
t
e
r
l
yan
dr
e
de
e
mab
l
eatp
ar
.
So
l
u
t
i
o
n
:
Gi
v
e
n
:Fv=P50,
000=R
j
=1
00%=1
.
00
n
=4(
1
5)=60
r
=1
6%=0.
1
6
b
t
=1
5y
e
ar
s
y
=1
6.
5%=0.
1
65
m=4
0.
1
6
b
=
=0.
04
4
0.
1
65
i
=
= 0.
041
25
4
Re
qu
i
r
e
d:
p
u
r
c
h
as
ep
r
i
c
epan
db
o
n
ddi
s
c
o
u
n
tDb.
Fo
r
mu
l
a:
Db=Rv(
i–b
)
( )
)
(
1
1
+1
i
p=Rv–Db
Co
mp
u
t
at
i
o
n
s
:
)
(
1
(
1
+0.
041
25
Db=50,
000(
0.
041
25–0.
04)
0.
041
25
)
(
0.
91
1
5497
35
Db=50,
000(
0.
001
25)
=50,
000(
0.
001
25)(
22.
0981
7
541
)
0.
041
25
Db=P1
,
381
.
1
4
p=50,
000=1
,
381
.
1
4=P48,
61
8.
86
T
h
u
s
,t
h
ep
u
r
c
h
as
ep
r
i
c
eo
ft
h
eb
o
n
di
sP48,61
8.
86an
dt
h
eb
o
n
ddi
s
c
o
u
n
ti
sP1
,
381
.
1
4.
Ex
amp
l
e2:
AP36,
000b
o
n
dwi
t
hi
n
t
e
r
e
s
tat1
5%p
ay
ab
l
es
e
mi
an
n
u
al
l
yi
sp
r
i
c
e
dt
oy
i
e
l
d1
2%,m=2.Fi
n
d
t
h
ep
r
e
mi
u
man
dt
h
ev
al
u
eo
ft
h
eb
o
n
d.I
fi
ti
sr
e
de
e
mab
l
eatp
aratt
h
ee
n
do
ft
e
ny
e
ar
san
ds
i
x
mo
n
t
h
s
.
So
l
u
t
i
o
n
:
Gi
v
e
n
:
Fv=P36,
000=Rv
j=1
00%=1
.
00
r
5%=0.
1
5
b=1
t=1
0.
5y
e
ar
s
y=1
2%=0.
1
2
m =2
0.
1
5
b=
=0.
07
5
2
n=2(
1
0.
5)=21
Re
qu
i
r
e
d:
p
u
r
c
h
as
ep
r
i
c
epan
db
o
n
dp
r
e
mi
u
mPb.
Fo
r
mu
l
a:
Pb=Rv(
b–i
)
Co
mp
u
t
at
i
o
n
s
:
Pb=36,
000(
0.
07
5–0.
06)
( )
)
(
1
1
+i
i
p=Pv+Rb
)
(
(
Pb=36,
000(
0.
01
5)
Pb=P6,
352.
60
0.
1
2
i=
=0.
06
2
(
1
+0.
06)
1
0.
06
)
0.
7
05644597
=36,
000(
0.
01
5)(
1
1
.
7
6407
662)
0.
06
p=36,
000+6,
352.
60=P42,
352.
60
T
h
u
s
,t
h
ep
u
r
c
h
as
ep
r
i
c
eo
ft
h
eb
o
n
di
sP42,
352.
60an
dt
h
eb
o
n
dp
r
e
mi
u
mi
sP6,
252.
60.
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