Purchase Solution

Blue Grass Life: Determining the perpetuity values of a life insurance policy

Not what you're looking for?

Ask Custom Question

Blue Grass Life insurance is trying to sell you an investment policy that will pay you and your heirs $10,000 per year forever. If the required return on this investment is 12%, how much will you pay for the policy?

Purchase this Solution
Solution Summary

The solution shows the calculation for the answer of how much will be paid for the policy.

Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Time Value of Money

    Annuity due Ordinary annuity Calculating Perpetuity Values Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $13,000 per year forever. The policy costs $202,000.

  • Converting Corporate Book Income to Taxable Income

    In determining this, the corporation included $50,000 from an insurance policy paid because of the controller's death, $4,000 of premiums on other key-person life insurance policies, $10,000 interest on State of Nevada bonds, an addition of $15,000 to

  • Life insurance policies: EMV criterion

    95571 Life insurance policies: EMV criterion ABC insurance sells term life insurance policies. If the policy holder dies during the term of the policy ABC pays out $100,000.

  • Monthly return, ARP and effective annual return

    Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,200 monthly. The contract currently sells for $63,000. What is the monthly return, apr, and effective annual return on this investment vehicle?

  • Annuity Payments from Insurance Policy

    Here is the IRS regulation: If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy.

  • Whole Life v. Term Life Insurance

    Develop a set of family circumstances where each of term insurance and whole life insurance are the most appropriate type of policy to meet the consumer's needs.

  • Gross income, benefits, insurance policy payments

    A sentence or two explains the choice indicated determining the gross income, benefits, and insurance policy payments.

  • Life Insurance Types

    Return of premium term life insurance. Return of premium term life insurance (ROP) is unique in that it allows the policy holder to get a full refund of all the premiums paid at the end of the contract.

  • EAR / APR

    What is the effective annual rate on the loan? 1. Since the policy pays forever it is a perpetuity. What we would pay is the present value of the payments from the policy.

View More Related Solutions