At age 46, Jasper invested $34,000 in an annuity at an APR of 5.4%, compounded monthly, and agreed to start receiving payments at age 60. However, after exactly 8 years, Jasper withdrew $9200. His insurance company has a surrender charge of 2.2% of the withdrawal for taking money out of the annuity early, and the IRS also charges a 10% fee if you withdraw money before you are 59.5 years of age. Jasper is wondering what effect this early withdrawal had on his finances. Work with him to figure it out. 

Part I: What is the periodic interest rate of Jasper's annuity? How many months did Jasper have the annuity open before he made the early withdrawal?

Part II: What was the value of Jasper's annuity after 8 years (before he made the early withdrawal)? 

Part III: What was the value of Jasper's annuity right after he made the early withdrawal? 

part IV: How much of the early withdrawal did Jasper have to surrender to his insurance company? How much did the IRS charge?

Part V: How much of his withdrawal did Jasper have left over after paying all of the required fees?

Answer rating: 100% (QA)

Lets break down the problem step by step Part I Periodic Interest Rate and Duration The Annual Perce... View the full answer