I've been working at this question for some time now and I'm quite stuck. Some help would be greatly appreciated. I can figure out recurring payments by themselves, but I'm drawing a blank when it comes to annuities and varying interest rates.
A woman has reached her retirement age of 65 on October 15, 2015. She invests $300,000 and buys an annuity with monthly payments, first payment due on November 15, 2015 and the final payment due on July 15, 2039. What size monthly payment does she receive if the interest rate is j(12) = 6% for the 1st 5 years and j(12) = 3.9% thereafter?
Again, thanks for your help.