Lump sum needed today to purchase this pension

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Yianni has funds in his superannuation account and is considering purchasing a pension. In exchange for a lump sum payment now, Polysuper offers an annual pension over twenty years beginning with a payment of $61,000 at the end of the first year. There are twenty payments in total and the payments will increase at an annual rate of 2.5%pa. The appropriate opportunity cost of funds is j_2 = 9%pa what is the amount of the lump sum needed today to purchase this pension?

Reference no: EM131513469

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