Question
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the childs birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company:
First birthday: | $ | 920 | |
Second birthday: | $ | 920 | |
Third birthday: | $ | 1,020 | |
Fourth birthday: | $ | 850 | |
Fifth birthday: | $ | 1,120 | |
Sixth birthday: | $ | 950 |
After the childs sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. The relevant interest rate is 13 percent for the first six years and 7 percent for all subsequent years. |
Find the future value of the payments at the child's 65th birthday. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Future value | $ |
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