A 3-year term insurance policy has an annual premium of $200, and at the end of 3 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 3.5% compounded annually? (a) State the type. O sinking fund O present value of an annuity O amortization O ordinary annuity O future value (b) Answer the question. (Round your answer to the nearest cent.)

A 3-year term insurance policy has an annual premium of $200, and at the end of 3 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 3.5% compounded annually? (a) State the type. O sinking fund O present value of an annuity O amortization O ordinary annuity O future value (b) Answer the question. (Round your answer to the nearest cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 12P

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