Samantha, a 65 year old retiree, has a $600,000 super lump sum with which to provide for

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Samantha, a 65 year old retiree, has a $600,000 super lump sum with which to provide for her retirement income. Based on her life expectancy of 22.70 years, we advise her to purchase a 24-year annuity indexed at 3% p.a and payable monthly in arrears. She can purchase an annuity with these features at a yield of 3.85% p.a. effective.

Find the annuity unit cost and hence the dollar amount of Samantha’s starting annual annuity.

What issues need to be considered when buying an annuity as a retirement income stream product?

Related Book For answer-question

Canadian Income Taxation Planning And Decision Making

ISBN: 9781259094330

17th Edition 2014-2015 Version

Authors: Joan Kitunen, William Buckwold

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Posted Date: May 25, 2023 03:37 AM

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Samantha, a 65 year old retiree, has a $600,000 super lump sum with which to provide for

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Expert Answer:

To find the annuity unit cost and Samanthas starting annual annuity we can use the following formula Annuity Unit Cost Lump Sum Amount Present Value Factor Starting Annual Annuity Annuity Unit Cost An... View the full answer

Canadian Income Taxation Planning And Decision Making

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