Loveta has saved $250,000 and is ready to retire. She expects to earn 5 percent per year on her investments.
a) How much annual cash flow will this investment generate, assuming that Loveta doesn’t want to touch the principal?
b) How much annual cash flow will this investment generate, assuming that Loveta wants to withdraw equal annual payments over the next 20 years and have zero left at the end??
c) How much annual cash flow will this investment generate in the first year of retirement, assuming that Loveta wants to have her annual payments increase with inflation, which she estimates will average 3 percent per year?