Question 28

Your father is about to retire, and he wants to buy an annuity that will provide him with $100,000 of income per year for 20 years, beginning a year from today. The going rate on such annuities is 4.0%. How much would it cost him to buy such an annuity today (in $000s)?

a. $1,059.4

b. $1,147.0

c. $1,246.2

d. $1,359.0

e. $1,487.7