Bonus Question

Bonus Question - Ted anticipates that he will contribute to...

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ActSc 371 – Bonus Question to be Applied to Midterm 1 Marks Dr. Lysa Porth Due October 28 th at the beginning of class. No late assignments will be accepted – absolutely no exceptions! Ted was recently hired by Sun Life and has decided to contribute to their pension plan. He has decided to make monthly payments of $500 starting in one month. It is estimated that the effective rate of return on the pension fund is 8% per year, and this rate will continue in perpetuity.
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Unformatted text preview: Ted anticipates that he will contribute to the plan for 30 years, and immediately following his last $500 payment he will retire. The pension annuity will begin making monthly payments to Ted one month after his retirement date. If we assume that Ted receives 25 years worth of pension cheques after retirement, what will be the payment amount of each cheque? (6 marks)...
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This note was uploaded on 12/16/2011 for the course ACSTC 371 taught by Professor Lisaporth during the Fall '11 term at Waterloo.

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