A finance company has agreed to pay a retired couple a pension of $15000 per year for the next twenty years, indexed to inflation which 3.5% per annum.
Immediately after the tenth annual pension payment is made, the finance company increases the indexed rate to 4% per annum to match the increased inflation rate. Given these new conditions, how much will the company have paid the couple at the end of twenty years?
Answer: $431 235.13
The answer i got was at least $100 000 off or so
I'm not sure if i got the first 10 years right...
Any help would be appreciated!