Offers lifetime annuity to retiring professors

Assignment Help Financial Management

Reference no: EM131829034

Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $70,000 at age 65, the firm will pay the retiring professor $350 a month until death. a. If the professor’s remaining life expectancy is 20 years, what is the monthly interest rate on this annuity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the effective annual interest rate? (Use the monthly rate computed in part (a) rounded to 2 decimal places when expressed as a percent. Enter your answer as a percent rounded to 2 decimal places.)

Reference no: EM131829034

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