In its publicity material an insurance company guarantees that, for a fixed annual premium payable at the
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In its publicity material an insurance company guarantees that, for a fixed annual premium payable at the beginning of each year for a period of 25 years, the return will be at least equivalent to the premiums paid, together with 3% per annum compound interest. For an annual premium of £250 what is the guaranteed sum at the end of 25 years?
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The firstyear premium earns interest for 25 years and thus guarantees 250100325 The secondyear ...View the full answer
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