Question about Annuity Problem
Not what you're looking for?
I would like assistance in setting up these two problems so I can go ahead and solve them. There are no examples in my text.
a) A potential client asks you how much he would need to invest today (lump sum) to assure a $35,000 annual supplemental 15-year annuity upon retirement in 20 years. The annuity payment would begin at the end of his first year of retirement. Assume an annual investment yield of 8 percent.
b) Rather than investing a lump sum, what would be the annual pre-retirement annuity to obtain the same objective? Again, assume end-of-the year convention for the pre-retirement annuity (annuity paid at the end of the year) and an annual investment yield of 8 percent.
Purchase this Solution
Solution Summary
The solution explains two problems relating to retirement annuity savings.
Solution Preview
a) A potential client asks you how much he would need to invest today (lump sum) to assure a $35,000 annual supplemental 15-year annuity upon retirement in 20 years. The annuity payment would begin at the end of his first year of retirement. Assume an annual investment yield of 8 percent.
The amount at the start of retirement should be such that it pays $35,000 per year for 15 years. The amount at ...
Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Motivation
This tests some key elements of major motivation theories.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.