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 $ 950 Second birthday 950 Third birthday 1,050 Fourth birthday 850 Fifth birthday 1,150 Sixth birthday 950 After the childs sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $450,000. If the relevant interest rate is 15 percent for the first six years and 7 percent for all subsequent years, what would the value of the deposits be when the policy matures? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) Use EXCEL TO SHOW WORK
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