Present value. Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg. The policy will pay out $200,000 on your 85th birthday. You must buy the policy on your 62nd birthday. The insurance company can earn 9% on the purchase price of your policy. What is the minimum purchase price the insurance company should charge for this policy?
Present value. Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg. The policy will pay out $200,000 on your 85th birthday. You must buy the policy on your 62nd birthday. The insurance company can earn 9% on the purchase price of your policy. What is the minimum purchase price the insurance company should charge for this policy?
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter2: Using Financial Statements And Budgets
Section: Chapter Questions
Problem 6FPE
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