14. A finance company has agreed to pay a retired couple a pension of $19200 per...

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14. A finance company has agreed to pay a retired couple a pension of $19200 per year for the next twenty years, indexed to inflation that is 3% per annum. (a) How much will the company have paid the couple at the end of twenty years? (b) In return, the couple pay an up-front fee which the company invests at a compound interest rate of 7% per annum. The total value of the fee plus interest covers the pension payouts over the twenty-year period. How much did the couple pay the firm up front, correct to the nearest dollar? 14. A finance company has agreed to pay a retired couple a pension of $19200 per year for the next twenty years, indexed to inflation that is 3% per annum. (a) How much will the company have paid the couple at the end of twenty years? (b) In return, the couple pay an up-front fee which the company invests at a compound interest rate of 7% per annum. The total value of the fee plus interest covers the pension payouts over the twenty-year period. How much did the couple pay the firm up front, correct to the nearest dollar?

Answer rating: 100% (QA)

a To calculate the total amount the company will have paid the couple at the end of twenty years we ... View the full answer