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alexandr402 [8]
3 years ago
15

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $26,000 per year fo

rever. If the required return on this investment is 5.3 percent, how much will you pay for the policy
Business
1 answer:
USPshnik [31]3 years ago
4 0

Answer:

$490,566.04

Explanation:

Calculation for how much will you pay for the policy

Using this formula

Present value of perpetuity= Investment policy Annual inflows/ Required rate of return

Let plug in the formula

Present value of perpetuity=$26,000/0.053

Present value of perpetuity=$490,566.04

Therefore the amount that you will pay for the policy is $490,566.04

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