Betty Bronson has just retired after 25 years with the electric company. Her tot
ID: 2811704 • Letter: B
Question
Betty Bronson has just retired after 25 years with the electric company. Her total pension funds have an accumulated value of $240,000, and her lfe expectancy is 18 more years. Her pension fund manager assumes he can ean a 11 percent return on her assets. What will be her yearly annuity for the next 18 years? Use Appendx D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.(100 not round intermediate calculations. Round your final answer to 2 decimal places)Explanation / Answer
Given Information
PV= $240000
N= 18
Rate =11%
The Factor for 11% and 18 years as per given table = 7.702
Annuity= PV/Factor
=240000/7.702 = $31160.74
Now Calculation as per formula
Annuity = PV/((1-(1/(1+r)^n))/r)
=240000/((1-(1/1.11^18))/0.11)
=240000/(1-0.153)/0.11)
=240000/7.702 = $31160.737
Now in Financial Calculator BA II PLus
Enter 240000 then PV
Enter 0 then FV
Enter 11 then I/Y
Enter 18 then N
CPT PMT
You will get $31162.2888 as answer
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.