Suppose you are making a retirement plan for the Simson family. The family wishes to use their combined pension fund to purchase an annuity product that will pay $20,000 per year in perpetuity, and the first annuity income will be received at the end of this year. Suppose the appropriate rate of return on this product is 8% per year.

 

What is the value of the product (at the time of purchase) if the family delays the purchase until the end of the year (and delay receiving their first income also for a year)? (Round to the nearest dollar.)

Answer rating: 100% (QA)

To calculate the value of the annuity product at the time of purchase we can use the pres... View the full answer