Question

Smith buys an annuity that will provide twenty payments of $1,000 each. The first payment will...

Smith buys an annuity that will provide twenty payments of $1,000 each. The first payment will be made at the end of ten years, and the remaining payments will be made at the end of each two-year interval thereafter. The effective annual rate of interest is 5%.

In which of the following ranges is the net single premium for this annuity?

Possible Answers

A: < $5,600

B: ≥ $5,600 but < $5,620

C: ≥ $5,620 but < $5,640

D: ≥ $5,640 but < $5,660

E: ≥ $5,660

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