John has just retired & she is running out of cash. Her finanical planner advises her to do reverse mortage to improve her standard of living. The current market value of her self occupied property is $3M and it is expected that the value of the property grows at an annual rate of 3%. Suppose the interest rate charged by banks for reverse mortgage is 4%.
a. what is the monthly withdrawl amount if Mary expects to live for 20 years more ?
b. what is the monthly withdrawl amount if Mary expects to live for 15 years more and she wants to leave 500,000 to her son after the 15-year withdrawal period?