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Deferred Annuity
Deferred Annuity
Deferred Annuity
Period of Deferral- time between the purchase of an annuity and the start of the payments of the deferred
annuity.
r
m
m
][ ]−R
1− 1+ ( )
r
m
m
Example:
R = P4,000
r = 10% or 0.10
m = 12
k=2
n = 24
− ( k +n) −(k )
r r
P=R
[ ][ ]
( )
1− 1+
r
m
m
−R
1− 1+ ( )
r
m
m
− ( 2+24 ) −(2 )
0.10 0.10
P=4,000
[ ] [ ]
( ) ( )
1− 1+
12
0.10
12
1−( 1+0.00833 )−( 26)
−4,000
P=4,000 [ 0.0833
−4,000
0.0833 ] [ ]
1−( 1.00833 )−26 1− (1.00833 )−2
P=4,000 [0.0833
−4,000
0.0833 ] [ ]
1−( 0.0859…) 1−(0.9835 …)
P=4,000 [0.0833
− 4,000
0.0833] [ ]
0.19407 … 0.01646 …
P=4,000 [
0.0833
−4,000 ]
0.0833 [ ]
P=4,000(23.2894)−4,000(1.9752 …)
P=93,157.66−7,901.10
P=85,256.56