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Question
Choose the correct alternative :
A retirement annuity is particularly attractive to someone who has
Options
A severe illness
Risk of low longevity
Large family
Chance of high longevity
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Solution
A retirement annuity is particularly attractive to someone who has Chance of high longevity.
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For annuity due,
C = ₹ 20,000, n = 3, I = 0.1, (1.1)–3 = 0.7513
Therefore, P = `square/0.1 xx [1 - (1 + 0.1)^square]`
= 2,00,000 [1 – 0.7513]
= ₹ `square`
