Question
You are 35 years old. You have been offered the following annuity plan with the first...
You are 35 years old. You have been offered the following annuity plan with the first payment starting at age 40.
- A yearly income of $200 for the next 5 years
- A final lump sum payment of $10,000 on the final payment
If interest rates today remains at 5% for the next 5 years, and then 6% for all remaining years, what is the fair price of this annuity plan?
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