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Eternal Life Insurance Company wants to sell you an investment policy that will pay you and your heirs $5,000 at the end of each year
Eternal Life Insurance Company wants to sell you an investment policy that will pay you and your heirs $5,000 at the end of each year forever. The price of the policy is $72,000. Given your expertise with time value from Finance 3403, you are concerned that this price may not be fair. If you can earn 8% annually on your money, what would you consider to be a fair price for the policy? a) $9,000 d) $72,000 b) $62,500 e) $5,760 c) $57,600
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