9.54%
Magic
The PV of an Annuity of 800, with N 240, is 88,000. Solve for the rate of .762% x 12 = 9.145% APR, an EAR of 9.54%.
Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $88,000 at age 65, the firm will pay the retiring professor $800 a month until death.
a.
If the professor’s remaining life expectancy is 20 years, what is the monthly rate on this annuity? What is the effective annual rate?
Please explain how you solved this problem
