Micheline Wishes to Purchase a 25-Year Annuity Providing Payments of $1,000

Short Answer

Micheline wishes to purchase a 25-year annuity providing payments of $1,000 per month for the first 15 years and $1,500 per month for the remaining 10 years. Sovereign Insurance Co. has quoted her a rate of return of 5% compounded annually for such an annuity. How much will it cost Micheline to purchase the annuity from Sovereign?