(Previous Problem) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for this policy?

(Actual Problem) In the previous problem, suppose a sales associate told you the policy costs $475,000. At what interest rate would this be a fair deal?

12) Find the EAR in each of the following cases:

Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)

9% Quarterly

18% Monthly

14% Daily

11% Infinite