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Question: The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $12,500 per year forever.

If the required return on this investment is 4.7 percent, how much will you pay for the policy? (Round your answer to 2 decimal places, e.g., 32.16.)

Present value $

Suppose the Perpetual Life Insurance Co. told you the policy costs $270,000. At what interest rate would this be a fair deal? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Interest rate

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92868813

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