Finance-Use a semi-annual interest rate of2% to calculate

Finance-Use a semi-annual interest rate of2% to calculate

Subject: Business    / Finance
Question
You’re a 21-year old girl that is going to roam the African jungles followed by an attempt to climb the Mt. Everest for the next2years. You are, obviously, worried about dying in the process and want to make sure that your unemployed partner(who is a“struggling artist”) has some resource to look after himself if that happens. You buy a2-year term life insurance policy for$1Million. What is the insurance contract going to cost you annually?You will make one payment now, and assuming you don’tget eaten by a lion (i.e. you don’t get“lionized”), you will make the second payment after exactly a year.Assume that the payment from the insurance company, if it occurs, will be in the middle of the year. Use a semi-annual interest rate of2%.