Time Value: Value That Alternative Option
Not what you're looking for?
You are an investment manager and a client wants to know the lump sum he would need to deposit today to receive a $35,000 supplement retirement annuity for 15 years beginning when he retires in 20 years. Looking at his investment options, you expect an average annual return on the annuity of 8 percent.
How else could you structure his payment so as not to be such a shock to his pocket book? Value that alternative option.
Here's the loaded document, "Below" (see attachment).
The Annuity Payment
Payment: $1,289.03
Years: 15
The Annual Rate of: 8%
$35,000.00 (The Future Value)
To make the payments easier for the retiree, I would extend the years to 20 since he is not retiring until five years later.
The Annual payment will be $764.83
New Annuity Payment
Payment: $764.83
Years: 20
The same Annual Rate of: 8%.
Purchase this Solution
Solution Summary
The solution determines how else could you structure a payment so as not to be such a shock to their pocket book.
Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
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.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.