Question
**PLEASE SHOW WORK WITHOUT EXCEL An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or
**PLEASE SHOW WORK WITHOUT EXCEL
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the childs birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company:
First birthday: | $ | 940 |
Second birthday: | $ | 940 |
Third birthday: | $ | 1,040 |
Fourth birthday: | $ | 1,040 |
Fifth birthday: | $ | 1,140 |
Sixth birthday: | $ | 1,140 |
After the childs sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $130,000. If the relevant interest rate is 9 percent for the first six years and 5 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Child's 65th birthday
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