In the previous problem, suppose Curly's told you the policy costs $645,000. At what interest rate would

Question:

In the previous problem, suppose Curly's told you the policy costs $645,000. At what interest rate would this be a fair deal?

Previous problem

Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 6 percent, how much will you pay for the policy?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Essentials of Corporate Finance

ISBN: 978-1259277214

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

See More Books

Question Posted: Jun 30, 2016 09:32 AM

See More Questions

Calculating Perpetuity Values In the previous problem, suppose a sales associate told you the policy costs $280,000. At what interest rate would this be a fair deal?
In the previous problem, suppose Curly's told you the policy costs $400,000. At what interest rate would this be a fair deal?
In the previous problem, suppose you sell the stock at a price of $62. What is your return? What would your return have been had you purchased the stock without margin? What if the stock price is $44...
Prepare journal entries to record each of the following sales transactions of TFC Merchandising. TFC uses a perpetual inventory system and the gross method. May 1 9 Sold merchandise for $600, with...
Discuss online services that help humanize the online experience.
Sue is expecting a $1,000 paycheck in 14 days. A payday lender offers to give her cash now for this check. The lender's fee is 2.25% of the amount of the paycheck. Find the corresponding simple...
In this chapter, we reviewed the four major risks that firms face in international business: cross-cultural risk, country risk, currency risk, and commercial risk. Identify one or more countries that...
According to popcorn.org, the mean consumption of popcorn annually by Americans is 54 quarts. The marketing division of popcorn.org unleashes an aggressive campaign designed to get Americans to...
Please answer correctly snd in return i will provide a thumbs up thank you. Marigold Corp. is considering the replacement of a piece of equipment with a newer model. The following data has been...
Which series has the highest beta. BraveNewCoin Liquid Index for Bitcoin 1D BNC Trading Brave Ne Yellow Green Blue Orange
You're trying to save to buy a new $150,000 Ferrari. You have $35,000 today that can be invested at your bank. The bank pays 2.1 percent annual interest on its accounts. How long will it be before...
What is the future value of $1,345 in 16 years assuming an interest rate of 8.4 percent compounded semiannually?
Compare the probability distribution of the four individual grand prizes with the probability distribution of the six sample mean grand prizes. Would you select one or two envelopes? Why?
1. What are the threats being faced by Indian General Insurance Ltd. (IGIL)? 2. What are its traditional strengths? What 'business definitions' should it follow while capitalizing on its traditional...
You go to discuss the incident and the client's claims with your supervisor. As you retell the incident, it is clear that your supervisor is not comfortable. You ask your supervisor for advice on the...
Case Study Two: Rawlings Rawlings is an American sports equipment manufacturing company based in Town and Country, Missouri, and founded in 1887. Rawings specializes in baseball equipment and...
The discussion is for Administrating organizational change course. (we should write 300 words) Discussion question is: Refer to table 6.4 in your book. Think of a time when you were introduced to...
Content: Identify at least two resources for each of the four critical sections in the course project: Strategic Planning, Healthcare Reimbursement, Revenue Cycle Process, and Reimbursement...
Define atomic radius. For main-group elements, describe the observed trends in atomic radius as you move: a. Across a period in the periodic table b. Down a column in the periodic table
What is the amount of total interest dollars earned on a $5,000 deposit earning 6% for 20 years?
Forecasting Risk what is forecasting risk? In general would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why?
Sensitivity Analysis and Scenario Analysis What is the essential difference between sensitivity analysis and scenario analysis?
Sensitivity Analysis and Scenario Analysis What is the essential difference between sensitivity analysis and scenario analysis?
Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a...
Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets...
Entries for Sale of Fixed Asset Equipment acquired on January 5 at a cost of $134,640, has an estimated useful life of 17 years, has an estimated residual value of $9,350, and is depreciated by the...

In the previous problem, suppose Curly's told you the policy costs $645,000. At what interest rate would

Question:

Step by Step Answer:

Since payment is constant and is to be made forever therefore it is case of perpetuity For deal ...View the full answer

Essentials of Corporate Finance

Students also viewed these Cost Accounting questions