How much will you pay for the policy

Reference no: EM133269693

Question - The Cologne 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 2.5 percent, how much will you pay for the policy?

Suppose the annual payment will rise by 1% per year forever. What will be the price of the policy today?

Reference no: EM133269693

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