Your client is retiring today with a retirement account value of $2 million. She expects to live exactly 30 years in retirement and wishes to leave $2.5 million as bequest to her descendants. If her retirement account will earn 6 percent per year (compounded monthly), what is the maximum amount she can withdraw each month to achieve her goals? A. $7,550 B. $9,502 C. $5,723 D. $12,206
James just won a prize that will pay him $50,000 a year for 30 years, starting at the end of year 10. What is the current value of this prize if the discount rate is 12 percent, compounded annually? A. $392,657 B. $92,186 C. $119,307 D. $145,239
You are comparing two annuities with equal present values. The applicable discount rate is 8.50 percent, compounded annually. One annuity pays $8,700 on the first day of each year for 20 years. How much does the second annuity pay each year for 20 years if it pays at the end of each year? A. $9,439.50 B. $11,238.25 C. $8,018.43 D. $7,086.50
You borrow $350,000 to buy a house. The mortgage rate is 4.2 percent and the loan period is 30 years. Payments are made monthly. If you pay for the house according to the loan agreement, how much total interest will you pay? A. $313,727.06 B. $382,512.65 C. $277,086.67 D. $266,161.60