A 70-year-old male can purchase either of the following annuities for the same price from a life insurance company. A 20-year-term annuity will pay $394 at each month-end. A life annuity will pay $440 at the end of each month until the death of the annuitant. Beyond what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 7.2% compounded monthly.

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The Answer of A 70-year-old male can purchase either of the following annuities for the same price from a life insurance company. A 20-year-term annuity will pay $394 at each month-end. A life annuity will pay $440 at the end of each month until the death of the annuitant. Beyond what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 7.2% compounded monthly.

A 70-Year-Old Male Can Purchase Either of the Following Annuities