Sophia purchased a variable annuity contract with a $25,000 purchase payment. Surrender charges being with 7 percent

Question:

Sophia purchased a variable annuity contract with a $25,000 purchase payment. Surrender charges being with 7 percent in the first year, and decline by 1 percent each year. In addition, Sophia can withdraw 10 percent of her contract value each year without paying surrender charges. In the first year, Sophia needed to withdraw $6,000. Assume that the contract value had not increased or decreased because of investment performance. What was the surrender charge Sophia had to pay?

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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