A $500,000 whole life policy is available for $5150 per year, payable at the beginning of...

A $500,000 whole life policy is available for $5150 per year, payable at the beginning of the year. If 10% of this amount pays for insurance, and 90% goes into a saving plan, what is the cash value of the policy after 10 years? the insurance company guarentees a rate of 22.98% per year.

Solutions

Expert Solution

Saving amount per year = 90%*5150

Saving amount per year = $4635

Time = 10 years

R = 22.98%

So,

Cash value after 10 years = 4635*((1+22.98%)^10 - 1)/22.98%

Cash value after 10 years = $139434.6

So, cash value after 10 years will be $139434.6 or $139435.

Rahul Sunny answered 2 years ago

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