Assume that at retirement you have accumulated $500,000 in a variable annuity contract. The...
Question:
Assume that at retirement you have accumulated $500,000 in a variable annuity contract. The assumed investment return is 6% and your life expectancy is 15 years. What is the hypothetical constant benefit payment?
| A. $30,000.00 |
| B. $33,333.33 |
| C. $51,481.38 |
| D. $52,452.73. |
| E. cannot tell without additional information. |
Annuity
Annuity refers to a series of payment with an equivalent amount at an equal interval period over a range period. An annuity is commonly used to compute the monthly home mortgage payment, regular deposit to achieve the future target value of an investment, and monthly payment of a cash loan.
Answer and Explanation: 1
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View this answerIn this problem, we need can compute the constant benefit payment of the fund value using the formula below:
{eq}Annuity=\frac{Fund~value}{\frac{(1-(...
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What is Annuity? - Definition & Formula
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Chapter 2 / Lesson 7
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Learn about annuities. Understand what an annuity is, examine the annuity formula and learn how to calculate its future value, and see examples of annuities.
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