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Joe's insurance company, is trying to sell you a investment policy that will pay you and...

Joe's insurance company, is trying to sell you a investment policy that will pay you and your heirs $27,000 per year forever. Assume the required return on this investment is 7.7 %. How much will you pay for this policy? Please show all calculations and answers.

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Answer #1

Amount to pay for the policy= present value of perpetuity

= CF/Rate

= 27000/7.7%=

350649.35
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