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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: $ 800 $ 800 $ 900 First birthday! Second birthday: Third birthday: Fourth birthday Fifth birthday! Sixth birthday! $ 900 $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 $355,000. If the relevant interest rate is 10 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 381,176.38 ( Child's 65th birthday

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: $ 800 $ 800 $ 900 First birthday! Second birthday: Third birthday: Fourth birthday Fifth birthday! Sixth birthday! $ 900 $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 $355,000. If the relevant interest rate is 10 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 381,176.38 ( Child's 65th birthday

Essentials Of Investments
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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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: First birthday: Second birthday: Third birthday: Fourth birthday t Fifth birthday! Sixth birthdays $ 800 $ 800 $ 900 $ 900 $ 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 $355,000. If the relevant interest rate is 10 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 381,176.38 X 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: First birthday: Second birthday: Third birthday: Fourth birthday t Fifth birthday! Sixth birthdays $ 800 $ 800 $ 900 $ 900 $ 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 $355,000. If the relevant interest rate is 10 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 381,176.38 X Child's 65th birthday
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