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Assumed Interest Rate

   Also found in: Acronyms 0.01 sec.
Assumed interest rate
Rate of interest used by an insurance company to calculate the payout on an annuity contract.

Assumed Interest Rate
In annuities, a component of how monthly payments to the annuitant are determined. It is the minimum interest rate that the annuity may accrue while the annuitant makes payments on it; the annuity may perform better than the assumed interest rate depending on how it is invested, but the assumed interest rate serves as a bottom for how much the annuitant will receive when he/she begins to draw payments.


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We fixed the problem by making the assumed interest rate an input variable, but we couldn't undo the damage already done.
For each participant, obtain a "present value factor" (PV factor) equal to the participant's current compensation multiplied by 1/ {1 + i} to the "nth" power, in which "i" is an assumed interest rate {not less than 7.
The substitute LOC covers the principal amount of bonds, $20,000,000 and interest representing 55 days of interest at a maximum assumed interest rate of 12% per annum based on a 360-day year.
 
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