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12 April, 02:06

The maybe pay life insurance co. is trying to sell you an investment policy that will pay you and your heirs $39,000 per year forever. if the required return on this investment is 5.8 percent, how much will you pay for the policy? (do not round intermediate calculations. round your answer to 2 decimal places,

e. g., 32.16.)

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  1. 12 April, 02:52
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    This cash flow is a perpetuity. To find the present value of perpetuity, we use the equation of

    Pv=C:r

    Pv=39,000:0.058

    Pv=672,413.79
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