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 2 decimal plagos 6 22161
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 2 decimal plagos 6 22161
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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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. 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F17532bae-b264-480e-9ec0-7a51ce7d56a6%2Ffde803e3-2a88-4d55-abbe-7f588fa4b22d%2F3sesi6_processed.jpeg&w=3840&q=75)
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
$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.)
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