1. Today is 1 January 2018. Jackson who is aged 80 has a portfolio which consists of three different types of financial instruments (henceforth referred to as instrument A, instrument Band instrument C.

• Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 July 2023.

• Instrument Bis a Treasury bond with a coupon rate of j2= 3.45% p.a. and face value of 100. This bond matures at par. The maturity date is 1 July 2020.

• Instrument Cis a Treasury bond with a coupon rate ofj2= 2.85% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2021.

  e. Jackson will use $50,000 from the total sale proceed of instruments as a single premium to purchase an annuity today. This annuity pays X at the end of each year while Jackson is alive. The estimated probability of Jackson surviving for the next 5 years is stated in table 1. The yield rate is assumed to bej1= 3.2% p.a. Calculate X value. Round your answers to three decimal places. Draw a detailed contingent cash flow diagram for instrument D, from the perspective of Jackson.