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An insurance company promises to pay Jane $1 million on her 65th birthday in return for a one-time payment of $125,000 today. (Jane just turned 30.

An insurance company promises to pay Jane $1 million on her 65th birthday in return for a one-time payment of $125,000 today. (Jane just turned 30.) At what rate of interest would Jane be indifferent between accepting the company's offer and investing the premium on her own?

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550176_FIN.xls

Current Age
Age at maturity
Term
Interest
Investment
Maturity 30
65
35
6.12% To Be determined
125000
1000000
999571

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