You decide you would like to retire at age 65, and expect to live until you are
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a. Describe the calculation you need to make to determine how much you must save to purchase an annuity paying $50,000 per year for the rest your life. Assume the interest rate is 7 percent.
b. If you want to keep your purchasing power constant, how would your calculation change if you expected inflation to average 2 percent for the rest of your life? 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,...
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Related Book For
Money Banking and Financial Markets
ISBN: 978-0078021749
4th edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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