An Insurance Company Is Trying to Sell You a Retirement

question 59

Multiple Choice

An insurance company is trying to sell you a retirement annuity. The annuity will give you 20 payments with the first payment in 12 years when you retire. The insurance firm is asking you to pay $50,000 today. If this is a fair deal,what must the payment amount be (to the dollar) if the interest rate is 8 percent?

• A)$5,093
• B)$12,824
• C)$9,472
• D)$11,874
• E)$10,422

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Definitions:

International Trade

The exchange of goods and services between countries.

Equilibrium Price

The market price at which the supply of an item equals the quantity demanded, leading to a stable market condition without surplus or shortage.

China

A populous country in East Asia, known for its ancient civilization and as a major economic and political power in the modern world.

Trade Restrictions

Regulations or policies that limit international trade, often imposed to protect domestic industries from foreign competition.