I can invest for a pension in either the Senex or the Geriatrix pension plan. Senex requires me to invest $1500 a year for the next 15 years (beginning one year from now), whereas Geriatrix requires an immediate deposit of $5 000 and 15 subsequent annual investment of $1 200 a year (also starting one year from now ). If my MARR is 15%, how much greater is the equivalent uniform annual cost to me of the series of payments I would make to Geriatrix versus the series of payments I would make to Senex?
A)$333
B)$444
C)$555
D)$666
E)$777

Question

Quizplus · Accepted Answer

The equivalent uniform annual cost (EUAC) for each plan is calculated using the formula for the present value of an annuity. The EUAC for Geriatrix is higher by $555 compared to Senex when considering the time value of money at a 15% MARR.

I Can Invest for a Pension in Either the Senex