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Your favourite professor is thinking about retirement in 5 years. To enjoy a life of cruise ships and watching the fish in the Maldives he
Your favourite professor is thinking about retirement in 5 years. To enjoy a life of cruise ships and watching the fish in the Maldives he wants to buy an annuity (however, you should assume that he will live forever with such a life). In the post is an offer, for this week only, from the University Pension Scheme for exactly what he wants: a 30,000 annual payment with a 4% growth rate, starting in 5 years. The rate of return is 14% for all investors. How much would you expect him to pay? Show your calculations. [3 marks]
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