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Andrew is retiring. He has no pension but has capital of $500,000. He is considering the following options:

a. Purchase an annuity from a life insurance company that pays a level amount for life.

b. Purchase an annuity from a life insurance company that pays an increasing amount (3% each year) for life.

c. Purchase a 20-year annuity certain.

d. Invest the capital and live off the interest.

e. Invest the capital and draw $40,000 annually.

What are the advantages/disadvantages of each?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91646875

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