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Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you...

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $42,000 per year forever. Assume the required return on this investment is 6.7 percent. How much will you pay for the policy?

Policy value today =

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Expert Solution

present value of perpetuity = cash flow per year/rate of return

= 42000/0.067

= 626865.67

jeff jeffy answered 2 years ago
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