urance company is offering a new policy to its customers. Typically t by a parent or grandparent for a child at the child's birth. The purch makes the following six payments to the insurance company: birthday: -nd birthday: birthday: h birthday: birthday: birthday: $860 $860 $960 $850 $ 1,060 $950 child's sixth birthday, no more payments are made. When the child er she receives $360.000. The
urance company is offering a new policy to its customers. Typically t by a parent or grandparent for a child at the child's birth. The purch makes the following six payments to the insurance company: birthday: -nd birthday: birthday: h birthday: birthday: birthday: $860 $860 $960 $850 $ 1,060 $950 child's sixth birthday, no more payments are made. When the child er she receives $360.000. The
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
Related questions
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 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:
$ 860
$ 860
$ 960
Future value
$850
$ 1,060
$950
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $360,000. The relevant interest rate is 10 percent for the first six
years and 7 percent for all subsequent years. Find 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcf47a4be-e1ef-42e6-8003-9a254ca7d7c4%2Fa67020f5-264f-49be-8e7d-6ffba95d38a3%2F1zll5bs_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. 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:
$ 860
$ 860
$ 960
Future value
$850
$ 1,060
$950
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $360,000. The relevant interest rate is 10 percent for the first six
years and 7 percent for all subsequent years. Find 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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