2. Jeff is planning to buy a life insurance policy. He is considering two options that offer identical death benefits and lapse dates. Policy A is a "paid-up" plan that requires an immediate down payment when the policy is issued plus four installment payments: Initial payment (n=0) of $2000 Four annual installments (n = 1 through n - 4) of $800 No further premium are due after end of year 4. Policy B is a traditional level-premium plan that requires an immediate down payment when the policy is issued plus yearly payments through the life of the policy. Initial payment (n = 0) of $1000 Annual premiums (n = 1 through lapse) of $400 Jeff wants you to use your knowledge of engineering economics to compare the two policies for him. a) For a short-term comparison, use a study period of 10 years to compute the present worth of the premiums that Jeff would pay on the two policies. Assume an APR of 5 %. b). For a long-term comparison, assume that the lapse date lies so far in the future that the study period is infinite. Again assume an APR of 5 % and compute the equivalent annual premium for each policy starting at n = 1 and continuing forever. Note that in this approach the initial payments at n = 0 and the four installments of Plan B are eliminated by annualizing their costs over the infinite) life of the plans