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Question;33. Your grandmother just died and left you $100,000 in a trust;fund that pays 6.5% interest. You must;spend the money on your college education, and you must withdraw the money in 4;equal installments, beginning immediately.;How much could you withdraw today and at the beginning of each of;the next 3 years and end up with zero in the account?;a. $24,736;b. $26,038;c. $27,409;d. $28,779;e. $30,218;34. Suppose you inherited $275,000 and invested it at 8.25% per;year. How much could you withdraw at the;beginning of each of the next 20 years?;a. $22,598.63;b. $23,788.03;c. $25,040.03;d. $26,357.92;e. $27,675.82;35. Your father's employer was just acquired, and he was given;a severance payment of $375,000, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to;withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his;funds, i.e., run the account down to zero?;a. 22.50;b. 23.63;c. 24.81;d. 26.05;e. 27.35;36. Your uncle has $300,000 invested at 7.5%, and he now wants;to retire. He wants to withdraw $35,000;at the end of each year, starting at the end of this year. He also wants to have $25,000 left to give;you when he ceases to withdraw funds from the account. For how many years can he make the $35,000;withdrawals and still have $25,000 left in the end?;a. 14.21;b. 14.96;c. 15.71;d. 16.49;e. 17.32;37. Your Aunt Ruth has $500,000 invested at 6.5%, and she plans;to retire. She wants to withdraw $40,000;at the beginning of each year, starting immediately. How many years will it take to exhaust her;funds, i.e., run the account down to zero?;a. 18.62;b. 19.60;c. 20.63;d. 21.71;e. 22.86;38. Your aunt has $500,000 invested at 5.5%, and she now wants;to retire. She wants to withdraw $45,000;at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give;you when she ceases to withdraw funds from the account. For how many years can she make the $45,000;withdrawals and still have $50,000 left in the end?;a. 15.54;b. 16.36;c. 17.22;d. 18.08;e. 18.99;39. Suppose you just won the state lottery, and you have a;choice between receiving $2,550,000 today or a 20-year annuity of $250,000;with the first payment coming one year from today. What rate of return is built into the;annuity? Disregard taxes.;a. 7.12%;b. 7.49%;c. 7.87%;d. 8.26%;e. 8.67%;40. Your girlfriend just won the Florida lottery. She has the choice of $15,000,000 today or a;20-year annuity of $1,050,000, with the first payment coming one year from;today. What rate of return is built into;the annuity?;a. 3.44%;b. 3.79%;c. 4.17%;d. 4.58%;e. 5.04%: a;41. Assume that you own an annuity that will pay you $15,000;per year for 12 years, with the first payment being made today. You need money today to start a new business;and your uncle offers to give you $120,000 for the annuity. If you sell it, what rate of return would;your uncle earn on his investment?;a. 6.85%;b. 7.21%;c. 7.59%;d. 7.99%;e. 8.41%;42. What annual payment must you receive in order to earn a;6.5% rate of return on a perpetuity that has a cost of $1,250?;a. $77.19;b. $81.25;c. $85.31;d. $89.58;e. $94.06

Paper#44741 | Written in 18-Jul-2015

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