A 65-year-old person has saved $1,250,000 and wishes to receive 10 annual annuity payments, beginning in one year. If the annuity rate is 5.75%, he can expect to receive $167,829 per year.

Question

Quizplus · Accepted Answer

The calculation for the annuity payment is: $1,250,000 x 0.0575 x ((1+0.0575)^10 / ((1+0.0575)^10 - 1)) = $167,829. Therefore, the person can expect to receive $167,829 per year.

A 65-Year-Old Person Has Saved $1,250,000 and Wishes to Receive