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Live Forever Life Insurance sells a perpetuity contract that pays $1,545 monthly. The contract currently sells...

Live Forever Life Insurance sells a perpetuity contract that pays $1,545 monthly. The contract currently sells for $124,000. What is the APR on this investment?

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Expert Solution

Monthly APR = Monthly payment /current price

                   = 1545/124000

                       = .012460 or 1.2460% monthly

APR = 1.2460*12 = 14.95%

jeff jeffy answered 2 years ago
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