2. You buy a perpetuity that starts its annual payment $100 in 5 years from now. The EAR is 5%. a. What is the present value of the perpetuity? b Now suppose that the annual payment grows at 3% per annum (all the other conditions are the same as above). What is the present value of this growing perpetuity?

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A:

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Q: what is the present value

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A: The future value of annuity is calculated using the formula below:

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A:

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A:

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A: The annual cash flow can be computed with the help of present value of annuity.

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.