The second product Suzie represents is an annuity. The customers of this product are typically retirees that use their retirement savings to buy a steady income stream. Like before, there are a range of options for this product, but the most typical arrangement is as follows:

• Customers buy this product on their 65th birthday when they retire.

• The annuity will make 20 annual payments of $80,000.

• The first annual payment of $80,000 will occur on the customers 68th birthday (customers typically rely on their personal savings to travel for the first few years).

• For this product, Wagon Financial can invest the customers money at 12% per annum effective.

  Using the information provided, answer the following questions.

5. e) What price should Wagon Financial charge for this product?