Question

Betty Bronson has just retired after 25 years with the electric company. Her total pension funds have an accumulated value of $300,000, and her life expectancy is 18 more years. Her pension fund manager assumes he can earn a 9 percent return on her assets. What will be her yearly annuity for the next 18 years? (Do not round intermediate calculations. Round your final answer to 2 decim

Answer 1

Answer:

$34,263.69

Explanation:

This is a time value of money(TVM) question. Since the $300,000 is at the start of the retirement. That would be the present value of the annuity payments. So, using a financial calculator, input the following;

Present value; PV = -300,000

Total duration; N = 18

Interest rate; I/Y = 9%

Onetime future value ; FV = 0

then compute recurring payment ; CPT PMT = 34,263.687

Therefore, her yearly annuity for the next 18 years will be $34,263.69