Use of Financial Calculator TI BA II Plus required. It is usually well known that the younger you are, the cheaper insurance is. Using your knowledge of annuities, what would the insurance premiums cost per year for a 20-year-old for an insurance policy in the amount of $100 000 to an age expectancy of 80? The current discount rate is 4 percent.

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The correct answer is A. $420.The insurance premiums can be calculated using the formula for the present value of an annuity:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present value of the annuityPMT is the annual paymentr is the discount raten is the number of yearsIn this case, the present value of the annuity is $100,000, the discount rate is 4%, and the number of years is 80 - 20 = 60. Substituting these values into the formula, we get:$100,000 = PMT * [1 - (1 + 0.04)^-60] / 0.04$100,000 = PMT * 15.046324PMT = $100,000 / 15.046324PMT = $420Therefore, the insurance premiums would cost $420 per year.

Use of Financial Calculator TI BA II Plus Required