Stefan worked for Greenbank Financial Services for five years. He left his vested pension benefits in the Greenbank plan when he changed employers. When he retired from his present employer at age 65, Greenbank gave him a choice between taking the vested pension benefits in the form of a lifetime annuity of $15,000 per year paid at the end of the year or a lump sum. Stefan wants to compare the value of the annuity to the lump sum. Assuming Stefan lives for 15 years and the rate of interest is 7%, what is the value of the annuity?

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Calculating the Present Value of the Annuity To compare the value of the annuity to the lump sum we ... View the full answer