Question
In: Finance
Present value. Standard Insurance is developing a long-life insurance policy for people who outlive their retirement...
Present value. Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg. The policy will pay out $240,000 on your 80th birthday. You must buy the policy on your 62nd birthday. The insurance company can earn 5.5% on the purchase price of your policy. What is the minimum purchase price the insurance company should charge for this policy? What is the minimum purchase price the insurance company should charge for this policy?
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Expert Solution
Present value=$240,000*Present value of discounting factor(rate%,time period)
=$240,000/1.055^18
=$240,000*0.381465904
=$91551.82(Approx).
jeff jeffy answered 2 years agoRelated Solutions
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