Find the actuarial present value of the warranty payment

Reference no: EM132199755

Problem - A three-year warranty on a new computer will pay b(k) = 500(4 - k) for failure in the kth year, for k = 1, 2, 3. The benefit is paid at the end of the year of failure. The age at failure random variable follows a Pareto distribution with mean 4 and variance 48. At the annual interest rate of i = 0.05. Find the Actuarial Present Value of the warranty payment.

Reference no: EM132199755

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