THE EFFECT OF HAZARD RATE FUNCTON FOR PRESENT VALUE OF ANNUITY

• Main Author: HEBER MEY FREDRYK PANJAITAN (NIM : 10108094); Pembimbing : Dr. Sri Redjeki Pudjaprasetya
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/15880
• Institution: Institut Teknologi Bandung

In this final project, annuity is referred to pension fund. Deterministic mathematical model for annuity has the form of first order linear differential equation. For the case of constant payments and interest rate, exact solution is explicit. And from that solution, we can determine the present value of annuity for any period. The present value of annuity obtained above has not taken into account life expectancy of human as a random variable. As we know, life expectancy differs basically by age. Life expectancy of human is computed from hazard rate function. We will use hazard rate function, associated with, survival function, cumulative distribution function and probability density function. In this final project, we give a scenario to determine the expectation of lifetime annuity present value for any age. The scenario uses the hazard rate function obtained from real data.