How much will this promise cost the financial institution

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A national financial institution is currently offering $50,000 a year for life as a special promotion. Current inflation is 2 percent a year, and the real rate of return is assumed to be 3 percent. One could suggest that this financial institution would receive a 2 percent premium for the risk inherent in its long-term investments.

Assuming you will live forever, how much will this promise cost the financial institution today when you win? calculate cost.

Reference no: EM131970040

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