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Sep08 Qn2

S

SummerBub

Member
Hi,
Could someone help me interpret the annuity tables in the question pls?

For example, in the exam report, when defining "What is an annuity"
The report wrote "For a male aged 65 with GBP100,000 to invest, we currently pay around GBP650 every month for the rest of their life"
How to derive 650?

Thanks so much..
 
Looks like they're assuming an annuity rate for a 65 year old of about 12.8.

Those were the days!

I don't think it matters what you use, as long as it's at least bordering on sensible. 12.8 doesn't look particularly "up to date" in the UK market at least, but it isn't so high or low that it is ridiculous, like 2.0 or 70.0 would be.
 
Sorry.. i still don't understand how to derive 650 given the annuity rate of 12.85

pls enlighten me
 
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