Assume that at retirement you have accumulated $825,000 in a variable annuity contract. The assumed investment return is 5.5%, and your life expectancy is 18 years. If the first year's actual investment return is 7%, what is the starting benefit payment?
A) $30,000.00
B) $74,401.95
C) $51,481.38
D) $52,452.73
E) The answer cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The starting benefit payment is calculated as follows:Starting benefit payment = Accumulated value * Assumed investment return / Life expectancyStarting benefit payment = $825,000 * 5.5% / 18 yearsStarting benefit payment = $825,000 * 0.055 / 18Starting benefit payment = $74,401.95

Assume That at Retirement You Have Accumulated $825,000 in a Variable