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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 $29,000 per year forever. Assume the required return on this investment is 7.5 percent.

How much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Policy value today            $

Solutions

Expert Solution

Policy value today =Annual inflows/required return

=(29000/0.075)

which is equal to

=$386,666.67(Approx).

jeff jeffy answered 2 years ago
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