ABSTRACT
Clear ly , the outcomes depicted i n Figures 15.2.3 and 15.2.4 are not
satisfactory. The next step w o u l d be to experiment wi th alternative
scenarios unt i l an acceptable one is found.
Pentikainen and Pesonen (1988) demonstrated how the model could
be used for sensitivity analysis. F igure 15.2.5 is from that paper. The
standard rate of inflat ion was i0 = 0.03, the average rate of return
on investments j0 = 0.04 and the bonus barrier coefficient 6 = 1 ;
other bases are as given i n the context of F igure 15.2.3.
