Live Forever Life Insurance Company is selling a perpetuity contract that pays $2,0 monthly. The contract currently sells for $125,000. a. What is the monthly return on this investment vehicle? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g 32.16.) b. What is the APR? (Do not round intermediate calculations and enter your answer a percent rounded to 2 decimal places, e.g.. 32.16.) c. What is the effective annual return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) a. Monthly return b. APR c. EAR % % %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Live Forever Life Insurance Company is selling a perpetuity contract that pays $2,000
monthly. The contract currently sells for $125,000.
a. What is the monthly return on this investment vehicle? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g..
32.16.)
b. What is the APR? (Do not round intermediate calculations and enter your answer as
a percent rounded to 2 decimal places, e.g., 32.16.)
c. What is the effective annual return? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a. Monthly return
b. APR
c. EAR
%
%
%
D
Transcribed Image Text:Live Forever Life Insurance Company is selling a perpetuity contract that pays $2,000 monthly. The contract currently sells for $125,000. a. What is the monthly return on this investment vehicle? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) b. What is the APR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the effective annual return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly return b. APR c. EAR % % % D
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