Question: A 65 year old man intends to use his retirement funds to

A 65-year-old man intends to use his retirement funds to purchase an annuity from a life insurance company. Given the amount of money the man has available to invest, the insurance company is able to offer two alternatives. The first option is to receive $2,785 each month for as long as he lives; the second option is to receive $3,500 each month, but for only 20 years (payments will be made to his estate if he should die before that time). The relevant interest rate is 6 percent per year monthly compounding. How long must the man live so that the first option is a better deal?


View Solution:


Sale on SolutionInn
Sales0
Views165
Comments
  • CreatedFebruary 25, 2015
  • Files Included
Post your question
5000