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: $ 910 Second birthday: $ 910 Third birthday: $ 1,010 Fourth birthday: $ 1,010 Fifth birthday: $ 1,110 Sixth birthday: $ 1,110 After the child's sixth birthday, no more payments are made.
When the child reaches age 65, he or she receives $420,000.
If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday?
(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)