What is the present value of the insurance product

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An insurance company will sell Jack Benny a product that costs $280,000. The product will pay $10,000 at the end of this year. Thereafter, the payments will grow annually at a 3 percent rate forever. Jack will be able to invest his cash flows at a rate of 6.5 percent annually. What is the present value of the insurance product and should Jack buy it?

Reference no: EM131012442

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