Question
Suppose you are 30 and have a $55,000 face amount, 20-year, limited-payment, participating policy (dividends will be used to build up the cash value
Suppose you are 30 and have a $55,000 face amount, 20-year, limited-payment, participating policy (dividends will be used to build up the cash value of the policy). Your annual premium is $495. The cash value of the policy is expected to be $2,200 in 20 years. Using time value of money and assuming you could invest your money elsewhere for a 7 percent annual yield, calculate the net cost of insurance. Use Exhibit 1-8. (Do not round intermediate calculations. Round time value factor to 3 decimal places and final answer to the nearest whole number.) Net cost of insurance
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