How much annual retirement income would she receive

Assignment Help Financial Management

Reference no: EM132058599

A woman has an inheritance in a trust fund for family members left by her recently deceased father that will pay $50,000 at the end of each year indefinitely into the future. She has just turned 60 and does not think that this perpetuity-immediate meets her retirement needs.

She wishes to exchange the value of her inheritance in the trust fund for one which will pay her a 5-year deferred annuity-immediate providing her a retirement annuity with annual payments at the end of each year for 20 years following the 5-year deferral period.

She would have no remaining interest in the trust fund after 20 payments are made.

If the trustee agrees to her proposal, how much annual retirement income would she receive. The trust fund is earning an annual rate of interest equal to 5%.

Reference no: EM132058599

Questions Cloud

Which prize should you choose if the interest rate is : You have won a contest which gives you the choice between receiving a $12,000 prize in 3 years or $15,000 prize in 6 years.

How much do you need to save monthly from your paycheck : What if instead of having a lump sum goal, you would like to retire and receive a monthly payment of $6,000 (starting one month after you retire).

Calculate the firms cash conversion cycle : Winston's 2015 sales (all on credit) were $110,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.6 times during the year.

What is the value of its total current liabilities : The company also has long-term debt of $281,400, $100,000 in its common stock account, and retained earnings of $187,565.

How much annual retirement income would she receive : If the trustee agrees to her proposal, how much annual retirement income would she receive. The trust fund is earning an annual rate of interest equal to 5%.

How much is your monthly payment : You wish to purchase a condo at a cost of $165,000. You are able to make a down payment of $45,000 and will borrow for the rest.

Determine the npv and pi and payback of this project : Determine the NPV, PI, IRR, MIRR and payback of this project. Should Wolverine accept this project?

What will one share of this common stock be worth : What will one share of this common stock be worth 11 years from now if the applicable discount rate is 8.0 percent?

What proportion of the lottery winnings should be invested : You just won a $200,000 lottery and are meeting with your financial advisor to discuss how to best invest this money.

User Account

All Pages