Della Ware has accumulated $600,000 in her RRSP and is about to purchase a 25-year annuity from which she will receive month-end payments. The money used to purchase the annuity will earn 4.8% compounded monthly.
a. What will be the monthly payment without indexing?
b. What will be the initial payment if payments grow by 2.4% compounded monthly?
c. How long will it be until the monthly payment from the indexed annuity exceeds the monthly payment from the constant-payment annuity?