Assume that the contract value had not increased

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Sophia purchased a variable annuity contract with $50,000 purchase payment. Surrender charges begin with 7 percent in the first year and decline by 2 percent each year. In addition, Sophia can withdraw 10 percent of her contract value each year without paying surrender charges. In the first year, Sophia needed to withdraw $9,500. Assume that the contract value had not increased or decreased because of investment performance. What was the surrender charge Sophia had to pay?

Reference no: EM13721834

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