(b) SingLife is offering an endowment policy where Sally, aged 40 today, will need to make the following payments:

41st birthday = $2,000

42nd birthday = $2,500

43rd birthday = $3,500

44th birthday = $5,000

In addition to the above, a final payment of $8,000 need to be made on her 60th birthday. When Sally reaches retirement age i.e. 63 years old, she will receive $60,000.

Indicate and explain whether Sally should purchase this endowment policy assuming the relevant interest rate is 7%.