1. ## superannuation/pensions

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! 2. Originally Posted by ipokeyou Answer:$431 235.13
That answer is correct.

x = 1st 10 years, y = last 10 years :

x = 15000(1.035^0) + 15000(1.035^1) + ... + 15000(1.035^9)

y = 15000(1.035^9)(1.04^1) + 15000(1.035^9)(1.04^2) + ... + 15000(1.035^9)(1.04^10)

x + y = 431,235.13

That's a hint...understand?

3. I got the answer now My error was in the last ten years, but it's all solved now. Thanks!