1. You plan to withdraw $2,000 a month from your retirement account for 20 years when the time comes. The money resides in an account that pays 4.5% interest compounded monthly. How much money should be in the account in order to be able to do this? (Hint: This is an annuity that decays).
2. You inherit $125,000. It is placed in an account earning 6.5% interest compounded monthly. How much can you withdraw every month for 8 years? How much do you actually receive in the 8 years?
3. Assume that you have taken out an amortized loan for $24,500. The yearly interest rate is 22% and you will pay off the loan in 7 years. What is the monthly payment?