Assume that at retirement you have accumulated $825,000 in a variable annuity contract. The assumed investment return is 5.5%, and your life expectancy is 18 years. What is the hypothetical constant-benefit payment?
A) $73,358.93
B) $33,333.33
C) $51,481.38
D) $52,452.73
E) The answer cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The hypothetical constant-benefit payment can be calculated using the formula for the annuity payment: P = A * (r / (1 - (1 + r)^-n)), where A is the accumulated amount ($825,000), r is the assumed investment return (5.5% or 0.055), and n is the number of years (18). Plugging in these values gives approximately $73,358.93.

Assume That at Retirement You Have Accumulated $825,000 in a Variable