ustomers 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 customer’s 68th birthday (customers typically rely on their personal savings to travel for the first few years). For this product, Wagon Financial can invest the customer
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Customers buy this product on their 65th birthday when they retire.
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The
annuity will make 20 annual payments of $80,000. -
The first annual payment of $80,000 will occur on the customer’s 68th birthday (customers typically rely on their personal savings to travel for the first few years).
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For this product, Wagon Financial can invest the customers’ money at 12% per annum effective.1.
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What price should Wagon Financial charge for this product?
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Suppose that immediately after making the fifth payment to Joseph as described above, Wagon Financial also implements a new investment strategy which they believe will yield even higher investment returns than the original 12% per annum.
Assuming this to be true, would Wagon Financial need to set aside more or less money than your answer in part f) to be sure that they can afford to make all future payments to Joseph? Justify your answer.
by Bartleby ExpertSuppose that Joseph, an existing customer of this product (with the arrangement specified above), has just received the fifth payment of this
Using the prospective method, how much money does Wagon Financial need to have set aside today (immediately after the fifth payment is made) to be sure that they can afford to make all future payments to Joseph?
by Bartleby Expert
