Question: Liz is retiring from the US Postal Service and will turn 70 next year.After 39 years of service, her monthly pension is $7,500.She does not...

Question:

The professor responded with the following to my answer below:

1. Monthly Pension = $7500

    Savings                 =$700000

    Life Expectancy = 17.5 years=210 months

    Long Term Bond Rate = 3% Rate/12 months = 3/12= .25 monthly rate

Annuit Payment = =PMT(0.25%,210,-700000)=$4,288.62

IRA Mandatory 4% each year IRA growth of 6% per year

700000*4%=28,0000

Liz should choose the annuity at this age.