Question

A Plus Insurance Corp. offers a lifetime annuity to retiring accountants. For a payment of Sx at age of 65, the company offers to pay the retiring accountant an amount of $1000 quarterly until death. Suppose Mr. Smith, who is just turned 60, is considering this offer. If the remaining life expectancy of Mr. Smith is 25 years and the effective annual rate on this annuity is 6.78% , find x, i.e., find how much Mr. A needs to pay at age 65 to guarantee $1800 quarterly from the age of 65 untill death.

Answer 1

The price of $1800 quarterly annuity from age 65 till Death: $78516.69