Payments to the insurance company


Problem: A well-known insurance company offers a policy for children. Typically, a parent or grandparent buys a policy for a child at the child's birth. the details of the policy are as follows. The purchaser makes the following six payments to the insurance company:

1st birthday: $750
2nd birthday: $750
3rd birthday: $750
4th birthday: $800
5th birthday: $800
6th birthday: $800

No more payments are made after the child's sixth birthday. When the child reaches the age of 65, he or she receives $250,000. If the relevant interest rate is 6% for the first 6 years and 7% for all subsequent years, is the policy worth buying? (Must use Microsoft Excel)

Solution Preview :

Prepared by a verified Expert
Accounting Basics: Payments to the insurance company
Reference No:- TGS01934311

Now Priced at $25 (50% Discount)

Recommended (99%)

Rated (4.3/5)