As settlement of a100,000 death benefit, a beneficiary elected to take anannuity-immediate payable monthly for 25 years.
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Question:
As settlement of a100,000 death benefit, a beneficiary elected to take anannuity-immediate payable monthly for 25 years. The monthly paymentwas calculated using an effective annual interest rate of 3percent.
After making paymentsfor 10 years, the insurance company decided to increase the monthlypayments for the remaining 15 years by changing the effectiveannual interest rate to 5 percent.
Calculate the increasein the monthly payment.
Related Book For
Financial Accounting Theory and Analysis Text and Cases
ISBN: 978-1118582794
11th edition
Authors: Richard G. Schroeder, Myrtle W. Clark, Jack Cathey
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