Insurance-about the new policy

Assignment Help Financial Management
Reference no: EM131056205

Insurance 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 detail of the policy are as follows: The purchaser (Say, the parent) makes the following six payments to the insurance company 1st Birthday: $750 2nd Birthday: $750 3rd Birthday: $850 4th Birthday: $850 5th Birthday: $950 6th Birthday: $950 After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $350,000. If the relevant interest rate is 11% for the first 6 years and 7% for all subsequent years, is the policy worth buying? *Using excel

Reference no: EM131056205

Questions Cloud

Planning to invest in a project for production of widgets : You are planning to invest in a project for the production of widgets. The cost of the project is $10M and the project generates a single cash flow one year after the investment. Demand for widgets can be either high or low with equal probability.
Cost of equipment-shipping and installation : New oven would cost $685,000, including cost of equipment, shipping and installation. No increase in capcity with new oven, however operating expenses would be reduced by $105,000. What is the NPV of the 2 projects and which should be accepted? The f..
Describe the functions of the organization : I want you to choose topic "Global Warming" for this assignment and also write it as a report to the organisation that you will chose. Describe the functions of the organization. Data justifying the need for the initiative
Starting one year after you buy the investment : An investment that will pay you $2,000 each year for the next 25 years, starting one year after you buy the investment. An investment that will pay $2,000 to you now, and to your heirs (children, grandchildren, any one else) forever Assuming that you..
Insurance-about the new policy : Insurance 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. When the child reaches age 65, he or she receives $350,000. If the relevant interes..
Stock price does not change over the life of the option : You have purchased a put option on Pfizer common stock. The option has an exercise price of $56 and Pfizer’s stock currently trades at $58. The option premium is $0.50 per contract. What is your net profit on the option if Pfizer’s stock price does n..
What is the portfolio beta and required return : An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta? Stock A $3,780 with a beta of 1.03; stock B $7,411 with a beta of 1; stock C $5,584 with a beta of 1.03; and stock D $5,895..
What is the ytm-stated on nominal-annual-basis : The current market price of Smith Corporation's 8 percent coupon, 8 year bonds is $1,125.61. An 8% coupon rate is paid semi-annually, and the par value is equal to $1,000. What is the YTM (stated on a nominal, annual, basis) if the bonds mature 8 yea..
Gordon or constant growth dividend discount : If the constant growth ("Gordon" or "Constant Growth Dividend Discount") model is to give a reasonablea valuation of a stock, which of the following is not a valid assumption for the model?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the accumulated sum of streams of payments

What is the accumulated sum of each of the following streams of payments?

  Net present value and internal rate of return analysis

Explain the concepts of net present value and internal rate of return analysis. What do the results of net present value and internal rate of return analysis tell senior managers of an organization? Would sensitivity analysis be a useful tool for ass..

  Find the probability that it will be able to give a dividend

Volcker Company follows the residual theory of dividends. It has 8 million shares of common stock, and it maintains its optimal debt/assets ratio at 25%. Its EBIT next year is expected to be $25 million, with a standard deviation of $5 million. Find ..

  Common stock is currently selling

Builtrite’s common stock is currently selling for $48 a share and the firm just paid an annual dividend of $2.30 per share. Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to finance a..

  What is the firms weighted average cost of capital

The capital structure for the Carion Corporation is provided here. The company plans to maintain its debt structure in the future. If the firm has an after-tax cost of debt of 4.5 percent, a cost of preferred stock of 12.6 percent, and a cost of comm..

  Maintain payout ratio have to be for firms EFN to be zero

Capstone Marketing Group has total assets of $6,348,000, sales of $3,429,945, and net income of $850,000. The company expects its sales to grow by 12 percent next year. All assets and costs (including taxes) vary directly with sales, and the firm exp..

  The managing investment banker is responsible for

The managing investment banker is responsible for

  How much would abby accumulate during an uninterrupted

Abby Slay who contributes $3,000 annually to a 401(k) plan with an employer match of $1,500 a year at 8% interest. How much would Abby accumulate during an uninterrupted 30-year career?

  Firm has an average inventory

North Side Wholesalers has sales of $948,000. The cost of goods sold is equal to 72 percent of sales. The firm has an average inventory of $23,000. How many days on average does it take the firm to sell its inventory?

  What is the equivalent after tax yield

Assume a municipal bond has 18 years until maturity and sells for $5,6040. It has a coupon rate of 5.70 percent and it can be called in 10 years. What is the yield to call if the price is 110 percent of par? A taxable corporate issue yields 6.5 perce..

  Using the perpetual growth method

Suppose the dividends for the Seger Corporation over the past six years were $2.52, $2.60, $2.69, $2.77, $2.87, and $2.92, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk pre..

  Based on the free cash flow valuation model

Based on the free cash flow valuation model, the value of Weidner Co.'s operations is $1,200 million. The company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd