For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.7% compounded monthly on the cash value of their policies Company 2: pays 4.72% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2

For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.7% compounded monthly on the cash value of their policies Company 2: pays 4.72% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 12P

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