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The Perpetual Life Insurance Co. is trying to sell Irene an investment policy that will pay her (and her heirs after her death) annual payments
The Perpetual Life Insurance Co. is trying to sell Irene an investment policy that will pay her (and her heirs after her death) annual payments when she retires in 30 years. All payments are paid at the beginning of each year. The first payment is $20,000 and the payment grows at 8% for 7 years and then grows at 3% forever. What is the present value of all the cash flows if the interest rate is 10% (EAR)
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