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Old 05-29-2018, 10:16 AM
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Rick_G Rick_G is offline
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Michael, your approach is correct. I agree that this is fairly quick for a five point question.

I think the reason this is not a four point question is because it touches on the "annuity substitution rule". This problem is similar to example 12 in the regulation at 1.430(d)-1(f)(9).

There are two funding target calculations. One is based on the lump sum form, and requires calculations at two different interest rates. My final answer is
1,811 = 5%[75%(37,711) + 25%(31,561)].
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