1) an immediate lump sum payout of $800,000
2) a regular annuity of $100,000payable to me. The annuity payments are guaranteed for a period of 10 years with payments continuing to be made to my estate should I die within the duration of the guarantee.
If my life expectancy is 18 years and the opportunity cost of funds at retirement is 11%p.a.( with interest compounded quarterly) for first 5 years and 12%(with interest again compounded quarterly) thereafter.
What choice should I choose assuming that i expects to live as long as my life expectancy??
What is the equivalent rate of return is earning from the annuity if $1000 was charged at the beginning of each year for the annuity option?
Please show the calculation
Thanks a lot!!!!!
更新1:
to: jim bo this is finance question but i m not cheat on the exam Please tell me if you know the answer Many Thanks!