PART ONE:

Chuck and Nancy take their pet rock company public and are soon multimillionaires.Recognizing the volatility facing the pet rock industry, Chuck purchased a $5M

straight life annuity that pays $200K a year. Chuck dies in a freak rock stampede 5 years later. What amount will be in his GE?

A.$0

B.$200,000

C.$2,400,000

D.$5,000,000

PART TWO:

Chuck and Nancy take their pet rock company public and are soon multimillionaires.Recognizing the volatility facing the pet rock industry, Chuck paid 60% of the cost for a $5M joint

and survivorannuity that pays $200K a year.A comparable annuity for Nancy based on her current age would cost $4M and at original purchase age would cost $6M.Chuck dies in a

freak rock stampede 5 years later. What amount will be in his GE?

A.$0

B.$200,000

C.$2,400,000

D.$5,000,000