Question
Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,000 monthly. The contract currently sells for $69,000. Required: (a) What is the
Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,000 monthly. The contract currently sells for $69,000.
Required: (a) What is the monthly effective return on this investment vehicle?
(b) What is the APR? (Do not round your intermediate calculations.)
(c) What is the effective annual rate (EAR)? (Do not round your intermediate calculations.)
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Valuing Financial Institutions
Authors: Z. Christopher Mercer
1st Edition
1556233795, 978-1556233791
