The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and...
Question:
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $33,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for the policy?
Perpetuity:
Perpetuity is a financial asset that pays a fixed amount indefinitely. The present value of a perpetuity is simply the amount of periodic payment divided by the required periodic return.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerYou will pay no more than $5,689,655.
The investor should pay no more than the present value of the cash flows from the investment. Since the...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
What is a Perpetuity? - Definition & Formula
from
Chapter 6 / Lesson 4
12K
Learn what perpetuity is in finance. Understand the meaning and definition of perpetuity, its characteristics and how its present value can be found using a formula.
Related to this Question
- 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 muc
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $21,000 per year forever. If the required return on this investment is 6.3 percent, how muc
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. If the required return on this investment is 6.3 percent, how muc
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $24,000 per year forever. If the required return on this investment is 6.3 percent, how muc
- 1. The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. If the required return on this investment is 5.1 percent, how
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $24291 per year forever. If the required return on this investment is 9.4 percent, how much will you pay for the policy?
- 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. If the required return on this investment is 8 percent, how much
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. If the required return on this investment is 8 percent, how much will you pay for the policy?
- The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $13,500 per year forever. If the required return on this investment is 4.9 percent, how muc
- The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $17,500 per year forever. If the required return on this investment is 5.7 percent, how muc
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. If the required return on this investment is 5.1%, how much will
- The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $17,500 per year forever. a. If the required return on this investment is 5.7 percent, how
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 7 percent, how much will you pay for the policy?
- The perpetual life insurance co. is trying to sell you an investment policy that will pay you and your heirs $18,000 per year forever. If the required return on this investment is 5.8 percent, how muc
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 6 percent, how much will y
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $44,000 per year forever. Assume the required return on this investment is 6.9 percent. How much
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. Assume the required return on this investment is 6.5 percent. How much
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $37,000 per year forever. Assume the required return on this investment is 6.2 percent. How much will you pay for the policy?
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 6 percent, how much will you pay for the policy?
- Cury's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per forever. If the required return on this investment is 6 percent, how much will you pay for the policy?
- Moe's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $15,000 per year forever. Assume the required return on this investment is 9%. What is the value of the policy today?
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $34,000 per year forever. Assume the required return on this investment is 7%. What is the value of the policy today?
- The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $18,500 per year forever. If the required return on this investment is 5.9%, how much will
- Bob's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $700 per year forever. If the required return on this investment is 12 percent, how much will you pay for the policy?
- Calculating Perpetuity Values: Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 6 percent, how much will you pay for the policy?
- Curly's Life Insurance Co. is trying to sell you an investment that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 6 percent, how much will you pay
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 6%, how much will you pay
- The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 6%, how much will yo
- Curly's Life Insurance Co. is trying to sell you an investment that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 6%, how much will you pay for the
- If the Alfa Life Insurance Co. will pay you and your heirs $1 at the beginning of each year forever, how much will you pay for the policy assuming the required return on this investment is 1 percent?
- The Wanting Life Insurance Co., is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever, and the first payment will start 3 years from now. If the require
- (Previous Problem) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 5
- Your Life Insurance Agent is trying to sell you an investment that will pay you $5,000 a year forever. If your required rate of return is 11% on an investment of this nature, what would you be willing to pay your agent today for this investment opportunit
- The Live Forever Life insurance company is attempting to sell you and your family a policy that will pay you $18,600 a year indefinitely. If the required rate of return was 6.3%, how much will you have to pay for the policy?
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $42,000 per year forever. A representative for Curly's tells you the policy costs $670,000. Required: At what interest rate would this be a fair deal? (
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. Suppose a sales associate told you the policy costs $475,000. At what interest rate would this be a fair deal?
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $23,000 per year forever. Suppose a sales associate told you the policy costs $468,000. At what interest rate would this be a fair deal?
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $33,000 per year forever. Suppose a sales associate told you the policy costs $478,000. At what interest rate would this be a fair deal?
- The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $24,192 per year forever. Suppose a sales associate told you the policy costs $528,363. At what interest rate would this be a fair deal?
- The eternal gift insurance company is offering you a policy that will pay you and your heirs $10,000 a year forever. The cost of the policy is 285,000. What is the rate of return for this policy?
- You are willing to pay $25,000 now to purchase a perpetuity which will pay you and your heirs $2,200 each year, forever, starting at the end of this year. If your required rate of return does not cha
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $640 per quarter for 25 years. You want to earn a minimum rate of return of 4.9 per cent. What is the most you are willing
- You deposit $10,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 8 percent, what will be the amount in the retirement
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $22,000 per year forever. Suppose a sales associate told you the policy costs $467,000. At
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. Suppose a sales associate told you the policy costs $465,000. At what interest rate would this be a fair deal? (Do not r
- You deposit $7500 annually into a life insurance fund for the next 20 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the a
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $680 per quarter for 20 years. You want to earn a minimum rate of return of 5.3 percent. What is the most you are willing to
- The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $10,113 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $179,869. At what interest rate would this be a fair d
- You deposit $7,500 annually into a life insurance fund for the next 20 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year
- You deposit $13,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 8 percent, what will be the amount in the retirement
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $670 per quarter for 25 years. You want to earn a minimum rate of return of 5.2 percent. What is the most you are willing to
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $710 per quarter for 20 years. You want to earn a minimum rate of return of 5.6 percent. What is the most you are willing to
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $32,000 per year forever. Suppose Curly's told you the policy costs $570,000. At what interest rate would this be a fair deal?
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. Suppose a sales associate told you the policy costs $465,000. At
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $36,000 per year forever. Suppose a sales associate told you the policy costs $481,000. At
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $23,000 per year forever. Suppose a sales associate told you the policy costs $468,000. At
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. Suppose a sales associate told you the policy costs $476,000. At
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $32,000 per year forever. Suppose a sales associate told you the policy costs $477,000. At
- 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 forever. Suppose a sales associate told you the policy costs $471,000. At
- 1. Calculating Annuity Present Values An investment offers $8,600 per year for 17 years, with the first payment occurring 1 year from now. Assume the required return is 9 percent. Requirement 1: Wh
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $781 per quarter for 24 years. You want to earn a minimum rate of return of 7.62 percent APR. What is the most you are willing to pay as a lump sum today to buy this annuity?
- Suppose you deposit $10,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 8 percent, what will be the amount in the re
- You are being offered an investment that will pay you (and your heirs) $10,868 per year forever, starting 15 years from now. If your discount rate on this investment is 6.5 percent, how much would you
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $28,000 per year forever. A representative for Curly's tells you the policy costs $530,000. At what interest rate would this be a fair deal?
- You deposit $11,000 annually into a life insurance fund for the next 11 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 6 percent, what will be the amount in the retirement
- A single premium used to buy a Whole Life policy will pay up the policy: A. To age 65 B. For the life of the policy C. For 1 year D. For 3 years
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. Suppose Curly's told you the policy costs $560,000. At what interest ra
- You deposit $12,000 annually into a life insurance fund for the next 11 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate
- You deposit $12,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate
- You deposit $10,000 annually into a life insurance fund for the next 12 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate o
- You deposit $10,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate
- You deposit $13,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate
- You deposit $11,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate o
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $39,000 per year forever. A representative for Curly's tells you the policy costs $640,000. At w
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $34,000 per year forever. A representative for Curly's tells you the policy costs $590,000. At wh
- Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27,000 per year forever. A representative for Curly's tells you the policy costs $520,000. At wh
- You are willing to pay $15,625 to purchase a perpetuity that will pay you and your heirs $1,250 each year, forever. If you required rate of return does not change, how much would you be willing to pay if this were a 20-year annuity of $1,250 annual paymen
- You are being offered an investment that will pay you (and your heirs) $14,330 per year forever, starting 16 years from now. If your discount rate on this investment is 5.6 percent, how much would you
- Using the "Human Life Value" method, how much life insurance should you purchase if you have 45 years until retirement, an annual income of $61,500 received at the start of each years, and a time valu
- You deposit $12,000 annually into a life insurance fund for the next 30 years, after which time you plan to retire. A. If the deposits are made at the beginning of the year and earn an interest rate of 7%, what will be the amount of retirement funds at t
- You are being offered an investment that will pay you (and your heirs) $16,964 per year forever, starting 11 years from now. If your discount rate on this investment is 8.6%, how much would you be wil
- You deposit $10,000 annually into a life insurance fund for the next 10 years, at which time you... 1 answer below You deposit $10,000 annually into a life insurance fund for the next 10 years, at w
- You are looking into an investment that will pay you $12,000 per year for the next 10 years. If you require a 15 percent return, what is the most you would pay for this investment?
- You have $19,750 you want to invest for the next 22 years You are offered an investment plan that will pay you 9 percent per year for the next 11 years and 13 percent per year for the last 11 years. 1: How much will you have at the end of the 22 years? 2
- Your grandfather won a lottery years ago. The value of his winnings at the time was $50,000. He invested this money such that it will provide annual payments of $2,400 a year to his heirs forever. What is the percentage of rate of return?
- An investment promises cash flows in years 1, 2, and 3 of $42,000. In years 4 and 5, it will pay $53,000. If your required rate of return is 9.7 percent, what is that worth today?
- An investment promises cash flows in years 1, 2, and 3 of $20,000. In years 4 and 5, it will pay $45,000. If your required rate of return is 13.9 percent, what is that worth today?
- You are now 25 years old and have just been sold an insurance policy with $10,000 protection on your life. The cost is $170 per year. If you live to age 65, the insurance company will pay you $20,000.
- The [{Blank}] is the amount payable to the beneficiary upon death of the insured named in a life insurance policy. a. Loan value b. Cash value c. Premium refund d. Face amount
- Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1, 300 monthly. The contract currently sells for $68,000. (a) What is the monthly return on this investment vehicle? (b) What is the APR? (Do not round your intermediate calculati
- You are offered a $10,000 life insurance policy with thirty annual premium payments of $126 each. What is the future value of the payments that you will have made after the policy is paid up, assuming the insurance company can earn 6% on invested capital?
- When you retire you will initially require an annual income of $125,000 per year. You anticipate living for 25 years during retirement with an 8% investment return. How much do you need in your pensio
- Roshanna has just won the lottery. Her required rate of return is 6%. Should she take the annual annuity payment of $125,000 for the next 20 years or an immediate lump sum payout of $1.5 Million?
- The Good Life Insurance Co. wants to sell you an annuity which will pay you $827 per quarter for 24 years. You want to earn a minimum rate of return of 9.92%APR. What is the most you are willing to pa
- A life insurance premium is paid each month. The insurer then subtracts a mortality and expense charge from the policy's cash value. This best describes which of the following life insurance policies? a. Whole Life b. Variable Whole Life c. Adjustable Who
- A 6-year investment will pay $1,500 at the end of this year, and the payments will grow at a rate of 3% per year. The required return is 10%. What is the present value of this investment? a. $6,532.89 b. $6,985.47 c. $7,195.03 d. $21,428.57 e. There
Explore our homework questions and answers library
Browse
by subject