Your Pension Plan Has Two Alternative Payout Methods

question 5

Multiple Choice

Your pension plan has two alternative payout methods.The first is a lump sum of $300,000 on your 65th birthday.The second is ordinary annuity with the first payment on your 66th birthday and the last payment on your 85th birthday.If the interest rate is 10.5%,then what size annuity payment would equate the value of the two alternatives?

• A) $36,447.98
• B) $35,911.96
• C) $37,059.21
• D) $35,237.89
• E) $34,687.32

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