You will pay for $539,682.5397 as the present value of the investment policy.
It is a concept that states an amount of money today is worth more than that same amount in the future. In other words, money received in the future is not worth as much as an equal amount received today. Receiving $1000 today is worth more than $1000 in the next five years from today.
How to calculate the policy value from the question?
Present value of the policy
= cash flows / required rate of return
= $34,000 / 6%
= $539,682.54
Therefore, you have to pay $539,682.54 for the investment policy.
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