The Maybe Pay 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 5.8 percent, how much will you pay for the policy?
Answer to relevant QuestionsFind the EAR in each of the followingcases:Gold Door Credit Bank is offering 6.7 percent compounded daily on its savings accounts. If you deposit $5,100 today, how much will you have in the account in 5 years? In 10 years? In 20 years?If the appropriate discount rate for the following cash flows is 7.38 percent per year, what is the present value of the cash flows?Year Cash Flow1..... $2,4802....... 03..... 3,9204...... 2,170A five-year annuity of ten $8,000 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 8 percent compounded monthly, what is the value of this annuity ...Often, junk bonds are not rated. Why?
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