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You have $600,000 in the bank. An insurance company is offering you can annuity of $24,000 per year in exchange for the $600,000. You expect to live about 30 years. Naively it seems like you are paying them S600, 000 for a total of 30x $24,000 $720,000 which is a great deal However, you also expect inflation to reduce the present value of the money by 2% each year. What is the present value of the money you will collect from the annuity? Is this a good deal or not?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93057669

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