The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that

Question

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Suppose a sales associate told you the policy costs $470,000. At what interest rate would this be a fair deal? (Round your answer to 2 decimal places. (e.g., 32.16))

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Suppose a sales associate told you the policy costs $470,000. At what interest rate would this be a fair deal? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

lET INTEREST RATE BE R

470,000 = 25000/r

r= 5.32%

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