Answer:
The hypothetical constant-benefit payment is $51,481.38.
Explanation:
This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)
Where;
PV = Present value accumulated retirement benefit = $500,000
P = Annual hypothetical constant-benefit payment = ?
r = investment return = 6%, or 0.06
n = life expectancy = 15
Substitute the values into equation (1) and solve for P, we have:
$500,000 = P * [{1 - [1 / (1 + 0.06)]^15} / 0.06]
$500,000 = P * [{1 - [1 / 1.06]^15} / 0.06]
$500,000 = P * 9.712248987741
P = $500,000 / 9.712248987741
P = $51,481.38
Therefore, the hypothetical constant-benefit payment is $51,481.38.
