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An insurance company is selling a perpetuity contract that

An insurance company is selling a perpetuity contract that pays $2,00 monthly. The contract currently sells for $100,000.

(a) What is the monthly return on this investment vehicle?

(b) if instead the amount of monthly interest grows at a 0.1% rate every month, how much should the company price this contract to offer the SAME monthly return rate?

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Finance Basics: An insurance company is selling a perpetuity contract that

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Finance Basics: An insurance company is selling a perpetuity contract that

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