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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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In 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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