The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35.000 per year forever. If the required return on this investment is 47 percent, how much will you pay for the policy? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35.000 per year forever. If the required return on this investment is 47 percent, how much will you pay for the policy? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
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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![The Maybe Pay Lfe Insurance Co. is trying to sell you an investment policy that will pay
you and your heirs $35.000 per year forever If the required return on this investment is
47 percent, how much will you pay for the policy? (Do not round Intermediate
calculations and round your answer to 2 decimal places, e.g, 32.16.)
Present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F57d08e19-7ed9-4914-b737-177e31d8f04d%2F9420ce60-d41f-419c-9edc-55d266757ecf%2F2x5bdng_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Maybe Pay Lfe Insurance Co. is trying to sell you an investment policy that will pay
you and your heirs $35.000 per year forever If the required return on this investment is
47 percent, how much will you pay for the policy? (Do not round Intermediate
calculations and round your answer to 2 decimal places, e.g, 32.16.)
Present value
Expert Solution
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Step 1
Annual payment = $35000
Interest rate = 4.7%
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