Jim, aged 62, was retrenched and has been unemployed for ten months, but is still looking for work. He has $620,000 in super and, based on advice received, decides to purchase a 4- year annuity of $24,000 p.a. payable monthly and indexed at 3% p.a. He can obtain this at a yield of 5.1% from a commercial provider. How much does Jim's annuity cost to purchase?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Jim, aged 62, was retrenched and has been unemployed for ten months, but is still looking for work. He has $620,000 in superannuation and, based on advice received, decides to purchase a 4-year annuity of $24,000 per annum, payable monthly and indexed at 3% per annum. He can obtain this at a yield of 5.1% from a commercial provider. How much does Jim’s annuity cost to purchase?
Transcribed Image Text:Jim, aged 62, was retrenched and has been unemployed for ten months, but is still looking for work. He has $620,000 in superannuation and, based on advice received, decides to purchase a 4-year annuity of $24,000 per annum, payable monthly and indexed at 3% per annum. He can obtain this at a yield of 5.1% from a commercial provider. How much does Jim’s annuity cost to purchase?
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