Asset Share Pricing Model

MVadz ( MVadz@aol.com )
Mon, 23 Mar 1998 22:07:11 EST

I am having a little trouble duplicating an exhibit in the NEAS Study Aid
98-6-16 (not 16B) on Personal Auto Premiums. On page 25, it shows the answer
to the sample problem. I cannot match the Fixed Expenses for renewals (Column
(7)). I understand why I begin with $28 and increase by 4% a year. However,
as I calculate down the column, my answers become further off. For example:

Policy Year Renewal (Fixed)
1 0
2 29
3 30
4 31
5 33
6 34
7 35
8 37
etc.

As you can see, I'm getting further from the answers in the Study Aid. Can
anyone help me to clear this up? Also, should I be rounding after each years
calculation or not? (i.e. for policy year 4, should it be 30*1.04 or
28*(1.04)(1.04)(1.04)?)