Monthly payments from the annuity contract

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Julie Maragon has just turned 85. Due to historically low returns in the government bond market, Ms. Maragon is planning to purchase a life-annuity from Brighthouse Financial that will pay her a monthly income of $8,000 for the rest of her life. The cost of this life annuity is $746,875. The actuarial tables from the Social Security Administration show that Ms. Maragon's current life expectancy is 7.00 years. Ms. Maragon's best available alternative investment has a quoted monthly compounded rate of return of 2.28 percent. Use an appropriate Excel function (being sure to document your use of the function) to determine the minimum number of months that Ms. Maragon must live in order for the present value of the monthly payments from the annuity contract to exceed their $746,875 cost.

Reference no: EM132375449

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