A=C((1+r)squared-1/r)
Rhonda, a 40-year-old woman, is trying to determine whether she should buy a $250,000 whole
life ($3008/year) or a 20-year term life policy ($185/year). She has been told that the whole life policy will earn 1.75%
interest compounded annually on her yearly premium. She has also found that if she invested.
the difference in her policy premiums in a mutual fund she could be earning a 3.75% interest rate
compounded annually. At the end of 20 years which is the better value and by what amount? $
I