Eternal Life Insurance Company wants to sell you an investment policy that will pay you and your
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Question:
Eternal Life Insurance Company wants to sell you an investment policy that will pay you and your heirs $5,000 at the end of each year forever. The price of the policy is $72,000. Given your expertise with time value from Finance 3403, you are concerned that this price may not be fair. If you can earn 8% annually on your money, what would you consider to be a fair price for the policy?
a) $9,000
b) $72,000
c) $62,500
d) $5,760
e) $57,600
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Posted Date: