Lg6 455 number of yearsannuities in each of the

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Unformatted text preview: ay the loan fully. Finding Jill Moran’s Retirement Annuity S unrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of research, Jill Moran. Ms. Moran by contract will retire at the end of exactly 12 years. Upon retirement, she is entitled to receive an annual end-of-year payment of $42,000 for exactly 20 years. If she dies prior to the end of the 20-year period, the annual payments will pass to her heirs. During the 12-year “accumulation period” Sunrise wishes to fund the annuity by making equal annual end-of-year deposits into an account earning 9% interest. Once the 20-year “distribution period” begins, Sunrise plans to move the accumulated monies into an account earning a guaranteed 12% per year. At the end of the distribution period, the account balance will equal zero. Note that the first deposit will be made at the end of year 1 and that the first distribution payment will be received at the end of year 13. Required a. Draw a time line depicting all of the cash flows associated with Sunrise...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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