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The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will...

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $29150 per year forever. If the required return on this investment is 7.2 percent, how much will you pay for the policy? (Round time value factors to 6 decimal places and final answer to the nearest dollar amount.)

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Expert Solution

Present value of perpetuity=Annual inflows/interest rate

=29150/0.072

=$29150*13.888889

=$404861(Approx).

jeff jeffy answered 2 years ago
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