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##### Ellen is planning her retirement and has \$1,000,000 in an annuity that earns 5% NAR compounded monthly.

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Question;1)Ellen is planning her retirement and has \$1,000,000 in an annuity that earns 5% NAR compounded;monthly.;a How many years can she receive benefits if she takes out \$6,000 at beginning of each month if she;reserves \$50,00 to give to each of her two children when she dies?;b How much can she withdraw at the beginning of each month if she plans a future lifespan of 30 years;if she reserves \$50,00 for each of her two children when she dies?;2) Barney has \$232,000 remaining in his retirement account that earns 6% NAR compounded;monthly. He is 70 years old and wants to ease into retirement over ten years by withdrawing;\$50,000 today and then gradually deplete the fund by reducing the amount withdrawn by \$5,000;each year thereafter (e.g. withdraw \$50,000 today, withdraw \$45,000 at the end of year 1;\$40,000 at the end of year 2, through \$0.00 in year 10). He will live on social security and;Medicare after the retirement funds are depleted. Is this scheme possible? Explain why or why;not. Assume end of year withdrawals.;3)An investment advisor forecasts quarterly dividends for Underground Materials Corporation;(UMC) stock as shown below. If the stock is forecasted to be selling for \$175 at the end of 2015;what should one pay for this stock today to earn a 15% effective annual rate.;Year;Quarter;Dividends;Solution;2014;3;\$2.00;2014;4;\$3.00;2015;1;\$3.50;2015;2;\$3.50;2015;3;\$4.00;2015;4;\$4.00

Paper#47563 | Written in 18-Jul-2015

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