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We Pay Insurance Co. will pay you $1,025 each quarter for 21 years. You want to...

We Pay Insurance Co. will pay you $1,025 each quarter for 21 years. You want to earn a minimum interest rate of .82 percent per quarter. What is the most you are willing to pay today for these payments?

Solutions

Expert Solution

Payment each quarter = P = 1025

Number of periods = n = 21*4 = 84 quarters

Interest Rate = 0.82 % or 0.0082 quarterly

Present Value = P[1 - (1+r)-n]/r = 1025(1 - 1.0082-84)/0.0082 = $62051.15

jeff jeffy answered 2 years ago
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