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What would the value of deposits be when the policy matures

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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 details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company:

First birthday        $870

Second birthday  $870

Third birthday     $970

Fourth birthday   $850

Fifth birthday     $1,070

Sixth birthday     $950

Question 1: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $370,000. If the relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years, what would the value of the deposits be when the policy matures?

Reference no: EM132496219

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