The Eternal Gift Insurance Company is offering you a policy that will pay you and your heirs $10,000 a year forever. The cost of the policy is $285,000. What is the rate of return on this policy if the payment starts today?
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The Eternal Gift Insurance Company is offering you a policy that will pay you and your heirs $10,000 a year forever. The cost of the policy is $285,000. What is the
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- As the beneficiary of a life insurance policy, you have two options for receiving the insurance proceeds. You can receive a lump sum of $200,000 today or receive payments of $1,400 a month for 20 years. If you can earn 6 % annual rate on your money, which option should you take and why? Group of answer choices You should accept the payments because they are worth $336,000 to you today. You should accept the payments because they are worth $247,800 to you today. You should accept the $200,000 because the payments are only worth $189,311 to you today. You should accept the payments because they are worth $209,414 to you today. You should accept the $200,000 because the payments are only worth $195,413 to you today.Assume that Social Security promises you $30,000 per year starting when you retire 45 years from today (the first $30,000 will get paid 45 years from now). If your discount rate is 5%, compounded annually, and you plan to live for 18 years after retiring (so that you will receive a total of 19 payments including the first one), what is the value today of Social Security's promise? The value today of Social Security's promise is $ (Round to the nearest cent.)Alfa Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $10,000 per year forever. If the guaranteed rate of return on this investment is 3.6 percent, how much will you pay for the policy? Can the excel and calculator solution be provided?
- Assume that Social Security promises you $34,000 per year starting when you retire 45 years from today (the first $34,000 will get paid 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 12 years after retiring (so that you will receive a total of 13 payments including the first one), what is the value today of Social Security's promise?Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today (the first $40,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments including the first one), what is the value today of Social Security´s promise?A life insurance co. is trying to sell you an investment policy that will pay you and your heirs $15,199 per year forever. If the policy costs $428,853 today, at what interest rate (in percent) is it properly priced? Answer to two decimals.
- Your insurance agent is trying to sell you an annuity that costs $40,000 today. By buying this annuity, your agent promises that you will receive payments of $220 a month for the next 21 years. What is the rate of return on this investment?Cury's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per forever. If the required return on this investment is 6 percent, how much will you pay for the policy?Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today (the first $40,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 20 years after retiring (so that you will get a total of 21 payments including the first one), what is the value today of Social Security's promise?
- A friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,001. At an interest rate of 10%, should you pay the $1,000 today to receive payment numbers 26 and onwards? What does this suggest to you about the value of perpetual payments?An insurance agent just offered you a new insurance product that will provide you with $1,959.20 13 years from now if you invest $400 today. What annual rate of interest would you earn if you invested in this product?You have decided to buy an annuity from a life insurance company that provides an annual payment of $25,000 per year at the end of each of the next 35 years. How much are you going to have to pay for this annuity contract if the insurance company promises an 9% annual rate of return?