Calculate expected present value of the annuity benefit

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Reference no: EM132018989

An increasing whole life annuity for a life currently aged 50 has the following benefit terms:

Annual Payment

Years 1-10 : 50,000 Year 10+ : 100,000

The benefit is payable at the beginning of each year. Given the interest rate i = 5% and attached tables, calculate the expected present value (EPV) of the annuity benefit.

b. (Continuation of Problem 2) Suppose the annuitant chooses to revise the benefit. The new annuity plan features the same EPV as the plan in problem 2 and the benefit is still payable at the beginning of each year, but the benefit is level at S during lifetime with a 10-year guarantee. Given the interest rate i = 5% and attached tables, calculate S.

Reference no: EM132018989

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