A life annuity on x provides for annual benefit payments


A life annuity on (x) provides for annual benefit payments for life beginning at age x. The initial benefit payment is 1000 and each subsequent payment increases by 6% (i.e., the benefit payment at age x+1 is 1060, the payment at age x+2 is (1000)(1.06)2, and so on). The first 10 payments are guaranteed and will be made regardless of whether (x) is alive or not. The interest rate is a constant 6%. You are given that 10px=0.9 and ex+10=10. Find the present value of this contract.

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Financial Management: A life annuity on x provides for annual benefit payments
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