Question
10A) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30233 per year
10A) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30233 per year forever. If the required return on this investment is 8 percent, how much will you pay for the policy?
10B) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27437 per year forever. Suppose a sales associate told you the policy costs $501647. At what interest rate would this be a fair deal?
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Mathematics Of Finance
Authors: Robert Brown, Steve Kopp, Petr Zima
8th Edition
0070876460, 978-0070876460
