Rusty Nail owns his house free and clear, and its worth $400,000. To finance his retirement, he

Question:

Rusty Nail owns his house free and clear, and it’s worth $400,000. To finance his retirement, he acquires a reverse mortgage (RAM) from his bank. The RAM provides a fixed monthly payment over 15 years on 70% of the value of his home at 5%. The payments are made at the beginning of the month. How much does Rusty get each month?

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...