Question

An insurance company is trying to sell you an investment policy that will pay you and...

An insurance company is trying to sell you an investment policy that will pay you and your heirs $50,000 per year forever. If the required return on this investment is 5.4 percent, how much will you pay for the policy?

A.$1,265,455.25

B.$1,627,950.42

C.$872,688.17

D.$925,925.93


Beginning three months from now, you want to be able to withdraw $2,300 each quarter from your bank account to cover college expenses. The account pays 1.45 percent interest per quarter. How much do you need to have in your account today to meet your expense needs over the next four years?

A. $32,633.32

B. $41,086.02

C. $28,785.91

D. $19,934.56

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Answer #1

Pay for the policy $925,925.93 [ 50,000 +0.054]

Have in acount today PATEEVE PMT*(1-(1/(1+rAn)))/r $32,633.32 $2300* (1-(1/(1.0145A16)))/0.0145

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