Maybepay Life Insurance Co. is selling a perpetual contract that pays $3700/year. The contract currently sells...

Maybepay Life Insurance Co. is selling a perpetual contract that pays $3700/year. The contract currently sells for $191000. What is the rate of return on this investment? Enter answer as 4 decimals (e.g. 0.1234).

Expert Solution

Present value of a perpetuity = C/r

We know that C = 3700
We know that the present value of perpetuity = 191000

191000 = 3700/r
where r is the rate of return on the perpetuity
r = 3700/191000
r = .0194

The rate of return on the investment is .0194

jeff jeffy answered 3 years ago

Chapman Life Insurance Company is selling a perpetual annuity contract that pays $1000 monthly. The contract...

Chapman Life Insurance Company is selling a perpetual annuity contract that pays $1000 monthly. The contract currently sells for 25,000. What is the monthly return on this investment miracle (Hint: what is the periodic interest rate)? What is the APR?

Eternity Insurance is selling a perpetuity contract that pays $1,050 monthly. The contract currently sells for...

Eternity Insurance is selling a perpetuity contract that pays $1,050 monthly. The contract currently sells for $61,000. a. Calculate the monthly rate of return on this investment. b. Calculate the APR. c. Calculate the effective annual rate.

Reign Cane Life Insurance is selling a perpetuity contract that pays $1,250 monthly. The contract currently...

Reign Cane Life Insurance is selling a perpetuity contract that pays $1,250 monthly. The contract currently sells for $250,000. What is the monthly return on this investment vehicle? What are the APR and EAR on this investment? Do not use excel or a calculator to solve

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,600 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,600 monthly. The contract currently sells for $66,000. a. What is the monthly return on this investment vehicle? b. What is the APR? c. What is the effective annual rate?

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1635 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1635 monthly. The contract currently sells for $140263. What is the monthly return on this investment vehicle?

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,050 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,050 monthly. The contract currently sells for $80,000. What is the monthly return on this investment vehicle? What is the APR? What is the effective annual rate?

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1625 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1625 monthly. The contract currently sells for $141036. What is the monthly return on this investment vehicle? (Enter answer as a percentage, round 2 decimal places)

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $2220 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $2220 monthly. The contract currently sells for $140088. What is the APR on this investment vehicle? ( answer as a percentage, and round your answer to 2 decimal places)

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,250 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,250 monthly. The contract currently sells for $75,000. a. What is the monthly return on this investment vehicle? b. What is the APR? c. What is the effective annual rate?

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,350 monthly. The contract...

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,350 monthly. The contract currently sells for $71,000. Required: (a) What is the monthly effective return on this investment vehicle? (b) What is the APR? (Do not round your intermediate calculations.) (c) What is the effective annual rate (EAR)? (Do not round your intermediate calculations.)

Question