An Insurance Company Is Trying to Sell You a Retirement

Multiple Choice

An insurance company is trying to sell you a retirement annuity. The annuity will give you 20 payments with the first payment in 12 years when you retire. The insurance firm is asking you to pay $50,000 today. If this is a fair deal, what must the payment amount be (to the dollar) if the interest rate is 8%?

A) $5,093
B) $12,824
C) $9,472
D) $11,874
E) $10,422 $50,000  1.08¹¹ = Pmt  PVIFA (8%, 20 yrs)