An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a ch 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: Fifth birthday: Sixth birthday: $ 840 $ 840 $ 940 $ 940 $ 1,040 $ 1,040 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $385,000. Child's 65th birthday If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy the child's 65th birthday? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a ch 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: Fifth birthday: Sixth birthday: $ 840 $ 840 $ 940 $ 940 $ 1,040 $ 1,040 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $385,000. Child's 65th birthday If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy the child's 65th birthday? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Chapter7: Tax Credits
Section: Chapter Questions
Problem 4MCQ
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