Calculate the Annual Cash Flows of a $2 Million, 10-Year

question 45

Multiple Choice

Calculate the annual cash flows of a $2 million, 10-year fixed-payment deferred annuity earning a guaranteed 8 percent per year if annual payments are to begin at the end of the sixth (6^th) year.

• A)$218,973.21.
• B)$202,752.97.
• C)$343,321.86.
• D)$405,505.95.
• E)$437,946.42.

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Definitions:

Inefficient Outcomes

Situations in which resources are not allocated optimally, leading to wasted resources or unmet potential.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because they are protected by an insurance or other agreement.

AFLAC

An American insurance company that provides supplemental insurance to help cover expenses health insurance doesn't.