mrskhg1745 mrskhg1745

30-03-2018
Business

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Live forever life insurance co. is selling a perpetuity contract that pays $2,000 monthly. the contract currently sells for $125,000. what is the monthly return on this investment vehicle?

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umarf2011 umarf2011

30-03-2018

Value of contract = Monthly income / r where 'r' is the monthly return
$125,000 = $2,000 / r
r = $2,000 / $125,000
= 1.6%

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