Question

Your variable annuity charges administrative fees at an annual rate of 0.19 percent of account value. Your average account value during the year is $204,000. What is the administrative fee for the year

Answer 1

The difference between $204,388 and $204,000 is the administrative fee = $388

Step-by-step explanation:

Admin charges have been agreed to be a function of Account value.

At 0.19% of the variable Account balance

If the Account value is averagely $204,000 during the year, this should be the post charges balance.

To derive the administrative fee =

If $204,000 = (100% - 0.19%) of the full balance

100% balance = $204,000 divided by 99.81% = $204,388

The difference between $204,388 and $204,000 is the administrative fee = $388

Answer 2

The administrative fee for the year is $387.6

Step-by-step explanation:

Administrative fee is the money charged for administering a group employee benefit plan to cover expenses related to record-keeping and/or other administrative costs

Given that:

Annual rate is 0.19% of account value = 0.0019

Average account value during the year = $204000

Therefore:

Administrative fee = Annual rate × Average account value = 0.0019 × 204000 = $387.6

The administrative fee for the year is $387.6