FIN 515 Devry entire course aDEVRY FIN 515 Week 2 Problem Set | Page 3

monthly payment if you take this loan? b. Alternatively, you can get a 15-year
mortgage with fixed monthly payments and an interest rate of 0.4% per month. How
much would your monthly payments be if you take this loan instead?
*A.1. This problem is from the Appendix to Chapter 4. Your grandmother bought an
annuity from Rock Solid Life Insurance Company for $200,000 when she retired. In
exchange for the $200,000, Rock Solid will pay her $25,000 per year until she dies.
The interest rate is 5%. How long must she live after the day she retired to come out
ahead (that is, to get more in value than what she paid in)?