Question
QUESTION 2. Professors Annuity Corporation offers a lifetime annuity to retiring professors. For a payment of $75,000 at age 65, the firm will pay the
QUESTION 2. Professors Annuity Corporation offers a lifetime annuity to retiring professors. For a payment of $75,000 at age 65, the firm will pay the retiring professor $475 a month until his death.
part a. If the professors remaining life expectancy is 20 years, what is the monthly interest rate on this annuity? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
part b. What is the effective annual interest rate? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
part c.If the monthly interest rate is 0.50%, what monthly annuity payment can the firm offer to the retiring professor? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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