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. For this policy, the purchaser (say, the parent) makes the following six payments to the insurance company: First birthday Second birthday Third birthday Fourth birthday Fifth birthday Sixth birthday $ 820 $ 820 Future value $920 $850 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $320,000. If the relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years, what would the value of the deposits be when the policy matures? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 690,759.66 $1,020 $950 Answer is complete but not entirely correct. $
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. For this policy, the purchaser (say, the parent) makes the following six payments to the insurance company: First birthday Second birthday Third birthday Fourth birthday Fifth birthday Sixth birthday $ 820 $ 820 Future value $920 $850 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $320,000. If the relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years, what would the value of the deposits be when the policy matures? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 690,759.66 $1,020 $950 Answer is complete but not entirely correct. $
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: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. For this policy, the
purchaser (say, the parent) makes the following six payments to the insurance company:
First birthday
Second birthday
Third birthday
Fourth birthday
Fifth birthday
Sixth birthday
$ 820
$ 820
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $320,000. If the relevant interest rate is 10 percent for the first six
years and 7 percent for all subsequent years, what would the value of the deposits be
when the policy matures? (Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
Future
value
$920
$850
$1,020
$ 950
Answer is complete but not entirely correct.
$ 690,759.66
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