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: $800
Second birthday:800
Third birthday: 900
Fourth birthday: 900
Fifth birthday: 1,000
Sixth birthday: 1,000

After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $190,000. The relevant interest rate is 10 percent for the first 6 years and 6 percent for all subsequent years.

1 answer

  1. I don't see a question, just statements of fact.

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