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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)

Solutions

Expert Solution

Monthly return=monthly income/current sales price

=(2220/140088)=0.015847181

Hence APR=Monthly return*12months

=0.015847181*12

=19.02%(Approx).

jeff jeffy answered 2 years ago
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