Cost of Policy = $477,000
Annual Payment = $32,000
Interest Rate = Annual Payment / Cost of Policy
Interest Rate = $32,000 / $477,000
Interest Rate = 0.0671 or 6.71%
So, this would be a fair deal at an interest rate of 6.71%
w Ch 6 0 The Maybe Pay Life Insurance Co. is trying to sell you an...
10A) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30233 per year forever. If the required return on this investment is 8 percent, how much will you pay for the policy? 10B) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27437 per year forever. Suppose a sales associate told you the policy costs $501647....
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $34,000 per year forever. Suppose Curly’s told you the policy costs $590,000. Required: At what interest rate would this be a fair deal? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $16,000 per year forever. Required: (a) If the required return on this investment is 9.50 percent, how much will you pay for the policy? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)) Payment for the policy $ (b) Suppose the Perpetual Life Insurance Co. told you the policy costs $344,000. At what...
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. If the required return on this investment is 6.3 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.) WI Present value
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35,000 per year forever. If the required return on this investment is 4.7 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
Problem 6-10 Calculating Perpetuity Values [LO1] The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $26,000 per year forever. If the required return on this investment is 5.3 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35,000 per year forever. If the required return on this investment is 5.3 percent, how much will you pay for the policy?
Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Assume the required return on this investment is 6 percent. Required: How much will you pay for the policy? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Policy value today Hints References eBook & Resources Hint #1 Check my work
2) The Maybe Pay Life Insurance company is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. If the required rate of return for this investment Is 5.1% , how much will you pay for the policy?
Larry's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Assume the required return on this investment is 7.9 percent How much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Policy value today