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Calculation annuity to be paid to an insurance policy

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Reference no: EM13828125

Problem:

An individual has accumulated some wealth in a self-administered stock market investment fund and now wants to cash in (or liquidate) a part of this fund and use it to purchase an annuity from an insurance company that will pay her $65000 annual beginning exactly one year from today for the next 15 years. If the applicable interest rate by the insurance company is 4.5%, how much will she have to pay for this annually?

Additional Information:

This question is about an individual accumulating wealth in shares as well as wants to liquidate the shares and purchase an annuity plan from an insurance company. The solution computes the amount of annuity that she has to pay to the insurance company so that she earns at least $65000 annually.

Reference no: EM13828125

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