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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Definitions:

Primary Source

A document or physical object which was created during the time under study.

Full-Fat Dairy

Dairy products made from milk with its natural fat content, as opposed to being skimmed or partially skimmed.

Nutrient-Dense Foods

Foods that have a high amount of nutrients but relatively few calories, emphasizing the quality of the nutrients they contain.

Empty Calories

Calories from food containing little to no nutritional value, often from added sugars and solid fats.