Question
The Sutherland 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 Sutherland 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 the policy? Suppose the annual payment will rise by 2% per year forever. What will be the price of the policy today?
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Finance And Economics Discussion Series Should Risky Firms Offer Risk Free DB Pensions
Authors: United States Federal Reserve Board, David A. Love
1st Edition
128870500X, 9781288705009
