As of Brice's 54^th birthday, he has accumulated $154,000 in his Registered Retirement Savings Plan (RRSP). What size of end-of-month payments in a 20-year annuity will these funds purchase at age 65 if he makes no further contributions? Assume that his RRSP and the investment in the annuity will earn 8.25% compounded monthly.

Learning Objectives

• Obtain understanding and employ the theory of time value of money to calculate present and future estimations of different financial instruments.
• Assess the economic valuation of annuities and perpetuities, including ordinary annuities, annuities due, deferred annuities, and perpetuities, with each compounding frequency.
• Compute the necessary expenditure and timeline to cover particular financial plans, including retirement accumulation, servitude of loans, and the setting aside of finances for education or other anticipated costs.