What is the amount of the lump sum needed today to purchase

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Reference no: EM132063881

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: EM132063881

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