An insurance company just launched a product that promises to pay an annual income of $10000 for 10 years. With the first income is to be paid in 5 years time. The market interest rate is 0.05 and will stay constant. The product selling at $63000. Please advise if a rational investor should buy this product or not and provide reason.

Answer rating: 100% (QA)

Solution To determine if a rational investor should buy this product we need to calculate the present value of the future income stream and compare it ... View the full answer