An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: Use Appendix A First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: Future value $ 900 $ 900 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $500,000. The relevant interest rate is 12% for the first six years and 8% for all subsequent years. Calculate the future value of the payments at the child's 65th birthday. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) $ $1,000 $1,000 $1,100 $1,100
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: Use Appendix A First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: Future value $ 900 $ 900 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $500,000. The relevant interest rate is 12% for the first six years and 8% for all subsequent years. Calculate the future value of the payments at the child's 65th birthday. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) $ $1,000 $1,000 $1,100 $1,100
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 6-75 Future Value and Multiple Cash Flows (LO1)
(table version)
An insurance company is offering a new policy to its customers. Typically, the
policy is bought by a parent or grandparent for a child at the child's birth. The
details of the policy are as follows: The purchaser (say, the parent) makes the
following six payments to the insurance company: Use Appendix A
BOSE.
First birthday:
Second birthday:
Third birthday:
Fourth birthday:
Fifth birthday:
Sixth birthday:
$ 900
$ 900
Future value
$1,000
$1,000
$1,100
$1,100
***
After the child's sixth birthday, no more payments are made. When the child
reaches age 65, he or she receives $500,000. The relevant interest rate is 12%
for the first six years and 8% for all subsequent years. Calculate the future value
of the payments at the child's 65th birthday. (Do not round intermediate
calculations. Round the final answer to 2 decimal places. Omit $ sign in your
response.)
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