Appendix D:
Betty Bronson has just retired after 25 years with the electric company. Her total pension funds have an accumulated value of $400,000, and her life expectancy is 16 more years. Her pension fund manager assumes he can earn a 10 percent return on her assets. What will be her yearly annuity for the next 16 years? Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Annuity Appendix D Present value of an annuity of $1. PVA PV = A 1 1- (+1) 3% 4% 5% 9% Period 1 1% 0.990 2. 3 4 1.970 2.941 3.902 4.853 5.795 6.728 0.971 1.913 2.829 3.717 4.580 5.417 6.230 0.926 1.783 2.577 2.312 3.993 4.623 5.206 5.747 5 6 9 6.247 6.710 10 11 12 13 14 15 2% 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 7.652 8.566 9.471 10.368 11.255 12.134 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 7.103 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 19.793 21.482 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10.380 10.828 11.274 11.690 12.085 12.462 14.094 15.372 17.159 18.256 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.B28 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 7.020 7.786 8.520 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 0.917 1.759 2.531 3.240 3.a90 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10.757 10.962 7.139 7.526 7.904 8.244 8.559 8.851 9.122 9.372 0.901 1.713 2.444 3.102 3.696 4.231 4.712 5.146 5.537 5.889 6.207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 8.422 8.694 8.951 9.042 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.843 8.055 8.244 8.304 16 17 18 19 20 25 30 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25.808 32.835 39.196 7.367 7.606 7.824 B.022 8.201 8.365 9.604 9.818 10.675 11.258 11.925 12.233 8.514 9.077 9.427 9.779 9.915 40 50 Appendix D (concluded) Present value of an annuity of $1 14% 16% 18% 40% 17% 0.855 20% 0.833 Period 1 2 3 0.877 1.647 2.322 0.847 1.566 30% 0.769 1.361 4 1.528 2.106 2.589 2.991 3.326 5 1.585 2.210 2.743 3.199 3.589 3.922 4.207 4.451 6 7 8 13% 0.885 1.668 2.361 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5.687 5.918 6.122 6.302 6.462 6.604 6.729 6.840 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 9 10 11 12 4.659 4.836 0.862 1.605 2.246 2.798 3.274 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.668 5.749 5.818 5.877 5.929 6.097 6.177 6.233 6.246 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.873 7.003 7.105 7.133 Percent 19% 0.840 1.547 2.140 2.639 3.058 3.410 3.706 3.954 4.163 4.339 4.486 4.611 4.715 4.802 4.876 4.938 4.988 5.033 5.070 5.101 5.195 5.235 5.258 5.262 35% 0341 1.289 1.696 1.997 2220 2.385 2.500 2.598 2.665 27 15 2752 2779 2799 2.814 2.825 2.834 2.174 2.690 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.000 5.092 5.162 5.222 5.273 5.316 5.353 5.467 5.517 5.548 5.554 25% 0.800 1.440 1.952 2.362 2.689 2.951 3.161 3.329 3.463 3.571 3.656 3.725 3.780 3.824 3.859 3.887 3.910 3.928 3.942 3.954 3.985 3.995 3.999 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.283 3.295 3.304 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.948 4.979 4.997 4.999 13 4.988 5.118 5.229 5.324 5.405 0.714 1.224 1.589 1.849 2.035 2.168 2.263 2.331 2.379 2.414 2.438 2.456 2.469 2.478 2.484 2.489 2.492 2.494 2.496 2.497 2.499 2.500 2.500 14 15 16 17 18 50% 0.667 1.111 1.407 1.605 1.737 1.824 1.883 1.922 1.948 1.965 1.977 1.985 1.990 1.993 1.995 1.997 1.998 1.999 1.999 1.999 2.000 2.000 2.000 2.000 6.047 6.128 2.840 2.844 2.848 19 3.311 3.316 20 6.938 7.025 7.330 7.496 7.634 7.675 25 5.475 5.534 5.584 5.628 5.766 5.829 5.87 1 5.aao 6.198 6.259 6.464 6.566 6.642 6.661 30 3.329 3.332 3.333 3.333 2.850 2.856 2.857 2.857 2.857 40 50 4.000 2.500
