Sophia purchased a variable annuity contract with a purchase payment of $70,000. Surrender charges begin with 9 percent in the firstyear and decline by 1.0 percent each year. In addition, Sophia can withdraw 12 percent of her contract value each year without payingsurrender charges. In the first year, Sophia needed to withdraw $13,700. Assume that the contract value had not increased ordecreased because of investment performance. What was the surrender charge Sophia had to pay?Surrender charge

Contract Value = $70,000Surrender charge = 9% in first year and declines by 1% each yearWithout…

Answered: Sophia purchased a variable annuity…

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

Section: Chapter Questions

Problem 1PS

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