An insurance company is offering a new policy to its


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 $ 890 Second birthday $ 890 Third birthday $ 990 Fourth birthday $ 850 Fifth birthday $ 1,090 Sixth birthday $ 950 After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $390,000. If the relevant interest rate is 11 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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $

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Financial Management: An insurance company is offering a new policy to its
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