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Larrys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the

Larrys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 4 percent, how much will you pay for the policy?

Values In the previous problem, suppose Larrys told you the policy costs $645,000. At what interest rate would this be a fair deal?

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