Joshua Wants to Structure a 20-Year Annuity So That Its

question 171

Short Answer

Joshua wants to structure a 20-year annuity so that its end-of-quarter payments are $2,000 for the first 10 years and $2,500 for the next 10 years. Pacific Life Insurance Co. offers to sell this annuity with a 4.8% compounded monthly rate of return to the annuitant. What amount must Joshua pay to Pacific for the annuity?

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Definitions:

Willfully Violates

Intentionally breaching or failing to comply with a legal obligation, rule, or law.

Securities Act of 1933

A U.S. federal law that governs the sale of securities, requiring them to be registered and to disclose relevant financial information to protect investors.

Civil Liability

The responsibility to compensate for wrongs or damages caused by one’s actions or negligence to another party, as governed by civil law.

Implied Agreement

An unwritten contract that is assumed to exist based on the actions and circumstances of the parties involved.