Elvira Is Considering Buying a 20-Year Ordinary Annuity to Provide

question 33

Multiple Choice

Elvira is considering buying a 20-year ordinary annuity to provide her with retirement income.The annuity will make annual payments of $25,000.If her opportunity cost is 7%, what is the maximum Elvira should pay for the annuity?

• A)$1,096,629
• B)$1,024,887
• C)$283,390
• D)$264,850

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Definitions:

Rorschach

A psychological test in which subjects' perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex algorithms, or both, often used to examine a person's personality characteristics and emotional functioning.

MMPI-2

Minnesota Multiphasic Personality Inventory-2, a psychological assessment that evaluates personality traits and psychopathology.

16PF

A psychological assessment tool consisting of 16 personality factors, used to understand an individual's personality traits.

Reality Principle

A psychoanalytic concept that represents the ability of the mind to assess the external world and act upon it accordingly, balancing with the pleasure principle.