Value of the Policy Assignment | Homework For You
May 22nd, 2020
An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: |
Don't use plagiarized sources. Get Your Assignment on
Value of the Policy Assignment | Homework For You
Just from $13/Page
First birthday: | $ | 880 |
Second birthday: | $ | 880 |
Third birthday: | $ | 980 |
Fourth birthday: | $ | 980 |
Fifth birthday: | $ | 1,080 |
Sixth birthday: | $ | 1,080 |
After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. |
If the relevant interest rate is 12 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child’s 65th birthday? Get Finance homework help today |