a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay

Question:

a. Suppose a 65-year-old person wants to purchase an from an insurance company that would pay $20,000 per year until the end of that person’s life. The insurance company expects this person to live for 15 more years and would be willing to pay 6 percent on the How much should the insurance company ask this person to pay for the A second 65-year-old person wants the same $20,000 but this person is much healthier and is expected to live for 20 years. If the same 6 percent interest rate applies, how much should this healthier person be charged for the In each case, what is the difference in the purchase price of the if the payments are made at the beginning of the year?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...