An insurance agent approaches Debra and would like to sell her the following contract: (I) Debra pays $5,000 per year for the coming 15 years. (2) In return, she will receive $7,000 a year for the following 15 years. Assume that interest rates will remain at a constant 9%. How much profit does the insurance company make? In order for the deal to generate zero profits, what an annual payment does Debra need to receive?

Answer rating: 100% (QA)

Here are the steps to solve this problem 1 Calculate the present value of Debras pa... View the full answer