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Please do not Solve in Exel MaY insurance company is offering a new...

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Finance

Please do not Solve in Exel

MaY insurance company is offering a new policy to its long-term customers. Typically, the policy is bought by a parent or grandparent for a child at the childs 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 childs sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $150,000. If the relevant interest rate is 9 percent for the first six years and 5.5 percent for all subsequent years, is the policy worth buying?

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