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: $ 910 First birthday: Second birthday: $ 910 Third birthday: $ 1,010 Fourth birthday: $ 1,010 Fifth birthday: $ 1,110 Sixth birthday: $ 1,110 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Child's 65th birthday

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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:
910
$910
First birthday:
Second birthday:
Third birthday:
Fourth birthday:
$ 1,010
$ 1,010
Fifth birthday:
$ 1,110
Sixth birthday:
$ 1,110
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $420,000.
If the relevant interest rate is 11 percent for the first six years and 7 percent for all
subsequent years, what is the value of the policy at the child's 65th birthday? (Do not
round intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Child's 65th birthday
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. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: 910 $910 First birthday: Second birthday: Third birthday: Fourth birthday: $ 1,010 $ 1,010 Fifth birthday: $ 1,110 Sixth birthday: $ 1,110 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Child's 65th birthday
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Follow-up Question
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:
$910
First birthday:
Second birthday: $ 910
Third birthday:
$ 1,010
Fourth birthday:
$ 1,010
Fifth birthday:
$ 1,110
$ 1,110
Sixth birthday:
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $420,000.
If the relevant interest rate is 11 percent for the first six years and 7 percent for all
subsequent years, what is the value of the policy at the child's 65th birthday? (Do not
round intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.)
> Answer is complete but not entirely correct.
Child's 65th birthday
$
367,778.00 X
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. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: $910 First birthday: Second birthday: $ 910 Third birthday: $ 1,010 Fourth birthday: $ 1,010 Fifth birthday: $ 1,110 $ 1,110 Sixth birthday: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) > Answer is complete but not entirely correct. Child's 65th birthday $ 367,778.00 X
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