Problem 5-60 Future Value and Multiple Cash Flows [LO 1]An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child atthe child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to theinsurance company:First birthday:Second birthday:Third birthday:Fourth birthday:Fifth birthday:Sixth birthday:After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $220,000.If the relevant interest rate is 10 percent for the first six years and 6 percent for all subsequent years, what is the value of the policy atthe child's 65th birthday?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Child's 65th birthday$ 850$ 850$950$950$1,050$ 1,050

Future value refers to the value of the current asset at some future date affected by interest and…

Answered: An insurance company is offering a new…

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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Kia deposited $1,100, at the BEGINNING of each year for 25 years in a credit union account. If the account paid 8% interest, compounded annually, use the appropriate formula to find the future value of her account. A. $73,441.24 B. $80,416.53 C. $86,849.86 D. $87,949.86
9. Define out of pocket maximum. a. A flat-rate fee you must pay when receiving any kind of health care service. b. The maximum amount of money your insurance will cover of a certain health care service. c. The maximum amount you will have to pay out of pocket in one year for the benefits your insurance covers. d. The maximum amount of money the insured party will pay toward prescription medications.
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 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. $ 800 $800 $ 900 $ 900 Future value $1,000 $ 1,000 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $350,000. The relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years. Calculate the future value of the payments at the child's 65th birthday. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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2. Using Table 19-5 and 19-6, find the annual premium for an automobile insurance policy for Sandra who has a good credit rating. She lives in Territory 1 and buys 50/100/50 coverage for her liability protection. Sandra's vehicle is Model Class 2 and is five years old. In addition to the liability coverage, she purchased comprehensive and collision insurance with a $250 deductible on comprehensive and a $500 deductible on collision. TABLE 19-5 Annual Automobile Liability Insurance Premiums Territory 1 Territory 2 Liability Limits* GOOD ОСС BAD GOOD ОСС BAD 50/100/50 385 600 846 354 552 778 100/300/100 425 682 961 391 627 884 250/500/250 460 750 1036 423 690 953 500/1000/500 530 843 1208 488 776 1111 GOOD = good credit; OCC = occasional payments past 30 days; BAD = judgments, collection, bankruptcy "Bodily injury maximum for one person/Total bodily injury coverage per accident/Property damage TABLE 19-6 Annual Auto Insurance Premium Rates for Comprehensive and Collision Territory 1…
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A-7
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 $780 $780 $880 $850 $980 $950 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $280,000. 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.)
Iman purchased an electric lawn mower, an edger, and an extension cord from her neighborhood yard and garden store. Immediately thereafter, the store emailed her a bill for these items. The bill stated that payment was due within 30 days. The bill is called a(n): Multiple Choice ledger statement. warranty. indenture. receipt. invoice.

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