You are y = 35 years old and are contemplating the purchase of a deferred pensio

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You are y = 35 years old and are contemplating the purchase of a deferred pension annuity (DPA) that will start providing income at age x = 70, assuming you survive. If you do not survive then you get nothing. Use a standard GoMa law of mortality with m = 86.34 and b = 9.5 to compute (_35a bar_35) under an r = 5% valuation rate. Now assume that-instead of buying the DPA 35 years before your expected retirement date-you invest the sum (_35a bar_35) in a savings account earning a fixed deterministic return of g in continuous time. What value of g ensures that you have enough money in 35 years to purchase the same exact retirement income at age 70 In other words, what rate must your investment earn to have exactly (a bar_70) in 35 years Is this larger than the valuation rate r Why (or why not)

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