Ask Question
19 September, 00:53

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. Suppose a sales associate told you the policy costs $476,000. At what interest rate would this be a fair deal?

+3
Answers (1)
  1. 19 September, 02:53
    0
    Answer: 6.51%

    Explanation:

    To get the interest rate at which the deal will be fair

    Annual payment per year / cost * 100

    Perpetuity = D/r

    476000 = 31000/r

    r = 31000: 476000

    r = 0.06512

    r = 0.06512 * 100

    r = 6.512%

    Where D is the dividend

    r is the rate
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers