6.3 The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35,000 per year forever. (1) If the required return on this investment is 4.7 percent, how much will you pay for the policy? (2) Now suppose a sales associate told you the policy costs $800,000. At what interest rate would this be a fair deal?

6.4 What happens to the future value of a perpetuity if interest rates increase? What if the interest rate decrease?

6.5 What happens to the future value of an annuity if you increase the rate r? What happens to the present value?