02-11-2010, 03:08 PM

Good morning

Mr T retires end of exactly 12yrs,and he is entitled to receive an annual end of year payment of 42000 for exactly 20yrs.During the 12yr accumulation period, he wishes to fund the annuity by making equal annual end-of-year deposits into an account earning 10% interest.Once the 20yrs distribution period begins,he is planning to move the accumulated monies into an account earning a guaranteed 15% per year.At the end of the distribution period,the account balance will equal to zero.Note that the first deposit will be made at the end of year 1 and the first distribution payment will be received at the end of year 13.

> What is the sum that he must accumulate by the end of year 12 to provide the 20year, 42000 annuity?

> What will be the annual end-of-year deposits that must be made into the account over the 12yr accumulation period to fund fully his retirement annuity?

> What will be his annual deposit during the accumulation period if it could earn 12% rather than 10% during the accumulation period?

> What will be the annual deposit if it was a perpetuity and all other terms wer the same as initially described?

Anyone who can assist me in this as all this sounds the same to me.

Thanks

Mr T retires end of exactly 12yrs,and he is entitled to receive an annual end of year payment of 42000 for exactly 20yrs.During the 12yr accumulation period, he wishes to fund the annuity by making equal annual end-of-year deposits into an account earning 10% interest.Once the 20yrs distribution period begins,he is planning to move the accumulated monies into an account earning a guaranteed 15% per year.At the end of the distribution period,the account balance will equal to zero.Note that the first deposit will be made at the end of year 1 and the first distribution payment will be received at the end of year 13.

> What is the sum that he must accumulate by the end of year 12 to provide the 20year, 42000 annuity?

> What will be the annual end-of-year deposits that must be made into the account over the 12yr accumulation period to fund fully his retirement annuity?

> What will be his annual deposit during the accumulation period if it could earn 12% rather than 10% during the accumulation period?

> What will be the annual deposit if it was a perpetuity and all other terms wer the same as initially described?

Anyone who can assist me in this as all this sounds the same to me.

Thanks