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14. Calenlating Perpetuity Values The Perpetual Life Insuranee Co. is trying to sell you an investment policy that will pay you and your heirs $20.000

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14. Calenlating Perpetuity Values The Perpetual Life Insuranee Co. is trying to sell you an investment policy that will pay you and your heirs $20.000 per jear forever. If the required return on this investment is 3.4 percent, how much will you pay for the policy? Suppose the Perperual Life Insurance Co, told you the policy costs $475,000. At what discount rate would this be a fair deal? 15. Calculating EAR Find the EAR in each of the following cases

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