For all simulation paths we determine the actuarial present value of annuity
and life insurance policies at each future time.
College funding scenarios often involve the use of a present value of annuity calculation.
The traditional present value of annuity calculation assumes that payments remain fixed, or if they do change, the rate of growth is fixed.
9 percent of the expected present value of annuity
payments) would be required to reduce the probability of insolvency resulting from aggregate mortality shocks to 5 percent, and a markup of 5.
FMV of Property Transferred Compute Annual Payment Present Value of Annuity
Factor STEP 2.
5 million total capital gain ($4 million present value of annuity
Based on these facts, is deemed to have made a gift of $35,864 $200,000 FMV of the assets transferred - $164,136 present value of annuity
However, because high-income individuals have longer life expectancies, they will have a higher expected present value of annuity
payments than will low-income individuals if everyone is required to annuitize at a uniform price, as in most public pension plans.