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

question 62

Multiple Choice

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. If the first year's actual investment return is 7%, what is the starting benefit payment?

• A) $30,000.00
• B) $74,401.95
• C) $51,481.38
• D) $52,452.73
• E) The answer cannot be determined from the information provided.

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Definitions:

Tax Rate

The fraction of earnings upon which the government imposes taxes on a person or corporate entity.

Interest Expense

The cost incurred by an entity for borrowed funds, typically presented on the income statement.

Incremental Cash Flows

The additional cash flow an entity receives from undertaking a new project or investment.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.