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Calculating perpetuity values The perpetual life insurance co . is trying to sell you an investment policy that will pay you and your heirs $

Calculating perpetuity values The perpetual life insurance co. is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. If the required return on this investment is 3.4%, how much will you pay for the policy? Suppose the perpetual life insurance co told you the policy costs $475,000. At what discount rate would this be a fair deal?

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