Question
An insurance policy requires you to make a single payment at the age of 30. In return, you can receive $100,000 every year starting from
An insurance policy requires you to make a single payment at the age of 30. In return, you can receive $100,000 every year starting from the age of 65 through 90 (i.e. the first payment will be made on the 65th birthday and the last on the 90th birthday). If the relevant interest rate is 10% compounded annually, how much will you pay for the insurance policy when you buy it on your 30th birthday?
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
