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A pension plan offers to pay $500,000 on a persons retirement (his/her/their sixty-fifth birthday) or a bi-monthly annuity for the remainder of the persons life
A pension plan offers to pay $500,000 on a persons retirement (his/her/their sixty-fifth birthday) or a bi-monthly annuity for the remainder of the persons life i.e., starting 2 months from the date of retirement and including his/her/their date of death. Interest rates are 8 percent, and a persons life expectancy has been determined statistically as being 77.5 years. Calculate the amount of the annuity that would make a person indifferent between the options?
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