Generates a growing stream of income in perpetuity

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A British insurance company is offering a new financial product that generates a growing stream of income in perpetuity. The motivation is that it will provide a steady, but growing, stream of income that can also be bequeathed to future generations. The product pays mce_markernbsp;25,000 at the end of the first year and increases by mce_markernbsp;5,000 each year (e.g., 25,000; 30,000; 35,000;...). If the discount rate is 6%, what would you be willing to pay for this product?

Reference no: EM13853063

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