1. You retired today and you have $2,000,000 in your retirement account. If your money will grow at a rate of 8% yearly after you retire and you wish to withdraw an equal amount from your retirement account each year for the next 30 years, what is the amount you can withdraw each year?
2. You are saving for retirement in 20 years. Today, you place $100,000 in a bank account that pays 4% interest, compounded annually, leaving the funds on deposit for the entire 20 years. You also contribute $2,000 each year into your pension plan for 10 years, beginning this year. The pension plan grows at 7% a year. How much do you have available for retirement, 20 years from now?
3. You make an investment which will pay your $10,000 after a year, another $15,000 in the 2nd year, another $8,000 in the 3rd year, and nothing after that. Is that stream of cash flows that you will receive an annuity? Why or why not?