Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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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: | $ 820 |
---|---|
Second birthday: | $ 820 |
Third birthday: | $ 920 |
Fourth birthday: | $ 850 |
Fifth birthday: | $ 1,020 |
Sixth birthday: | $ 950 |
After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $320,000. The relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years. Find the |
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