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Interest rates over the next 15 years are forecast to be as follows: 7% from the beginning

Interest rates over the next 15 years are forecast to be as follows: 7% from the beginning of year 1 to the end of year 5. 9% from the beginning of year 6 to the end of year 10. 5% from the beginning of year 11 to the end of year 15 The Qnum Insurance Company is offering you an income insurance policy that will pay you the following cash payments: $1,000 per year in years 1 through 5 a $2,000 payment at the end of year 6 $2, 500 per year in years 7 through 10 a $3,000 payment at the end of year 11 $3, 500 per year in years 12 through 15 All of the cash payments will be made to you at the end of each year. In order to receive these payments, you have to pay Qnum a single lump sum of money today. How much should you pay Qnum for this income insurance policy given the payments and interest rates listed above? Show your work

Dec 04 2019 View more View Less

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