The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you
Question:
The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $15,000 per year forever. If the required return on this investment is 4.3 percent, how much will you pay for the policy? Suppose the company told you the policy costs $445,000. At what discount rate would this be a fair deal?
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The time line is This cash flow is a perpetuity To find the PV of a perpetuity we u...View the full answer
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Related Book For 
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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