An insurance company plans to sell annuities to investors. Based on actuarial calculations, an investor has a 15-year life span, and he wants a $30,000-per-year annuity, payable at the end of each year. If the insurance company uses a 4% assumed investment rate, how much should the annuity cost?

Question

Quizplus · Accepted Answer

PV = 30,000 × 11eaaae8_8b37_19fe_a4b8_abae0ca22159_TB6474_11 = 333,552
Calculator entries are N = 15, I/Y = 4, PMT = 30,000, FV = 0, CPT PV → 333,551.62.

An Insurance Company Plans to Sell Annuities to Investors